Top CEOs of French bank Caisse d'Epargne resign

Oct 21, 2008

Groupe Caisse d'Epargne, third largest French consumer banking network has ousted its chairman and CEO after suffering a nearly €695 million ($931 million) trading loss on Oct 6.

Charles Milhaud, chairman of the management board, will be replaced by Bernard Comolet, while Alain Lemaire will become CEO, replacing Nicolas Merindol, Caisse d'Epargne said on Monday in an e-mailed statement.

Both Comolet and Lemaire are already at the group. Comolet is the head of the Caisse d'Epargne dealing with the Paris region, while Lemaire runs the Caisse d'Epargne branch dealing with the Provence-Alpes-Corse region.

The supervisory board of Caisse d'Epargne also accepted the resignation of Julien
Carmona, head of finance, the Paris-based lender said.

"This loss is the consequence at the same time of markets' exceptional volatility, and of the violation of instructions that the board and myself had given," Mr Milhaud, aged 65, said in a separate statement.

"Nevertheless, I take entire responsibility for it," he said, adding that he is asking for no golden parachute.

This abysmal loss seems to be attributed to a team of three traders who, after exceeding authorized limits on size and risk, bet on a rebound of stock markets just before the latter brutally crumbled on the 6^{th of October, declared French newspaper Le Figaro.}

The latest French banking turmoil, said by President Sarkozy to show an "absence of responsibility" at the bank, comes about nine months after Societe Generale SA suffered a €4.9 billion ($6.5 billion) loss, in late January, from unauthorized bets by trader Jerome Kerviel, prompting risk-management questions.

The worst week on record for European stock markets drove Caisse d'Epargne's trading losses.

A decision of Caisse d'Epargne's management board earlier this year to stop proprietary trading had not been implemented, Milhaud told French newspaper Le Journal du Dimanche on Sunday.

Mr Milhaud said he was informed on October 13th of a deficit of about $134 million, according to the same newspaper.