The top three executives at France's Caisse d'Epargne resigned after the bank suffered huge trading losses, plunging the struggling French financial market into deeper trouble amid the world credit crunch.
Charles Milhoud, chairman of the management board, CEO Nicolas Merindol and Julien Carmona, head of finance, stepped down Sunday, two days after the Caisse d' Epargne announced a 600-million-euro (810 million U.S. dollar) loss in trading derivatives.
Milhoud explained in a statement that the losses were due to "the exceptional volatility of the markets in this period, and of the violation of instructions that the board and myself had given."
He said he took the "full responsibility" for the losses.
Insiders said traders at the bank poured huge funds on Oct. 6 into the financial market, mostly invested in the index futures after the U.S. House endorsed the package financial market rescue plan three days earlier.
The stock market plummet the same day had resulted in major losses for the Caisse d' Epargne and 600 million euros (810 million U.S. dollars) vanished after the bank withdrew from the market two days later.
The bank executives' resignation attracted wide attentions as the world is gripped by a capital market crisis and many countries revised down their growth expectations.
The bank met mounting pressures from the government after the trading failure. President Nicolas Sarkozy urged the bank's leadership to "take the consequences" of the heavy losses. Finance Minister Christine Lagarde said she was "particularly frustrated and discouraged" by the loss.
Lagarde welcomed the resignations of the executives, saying "it's what we expected of them and I think it creates a precedent that responsibility does go right to the highest level."
Caisse d'Epargne employees worried the incident would have huge bearing on the bank's future as it is in the midst of a merger with another French mutual bank, Banque Populaire.
The merger promised to produce one of the biggest banking groups in France, with a total of 480 billion euros (659 billion U.S. dollars) in savings deposits and over 6 million customers.
They believe the 600-million-euro (810 million U.S. dollar) loss itself is "no big deal" as compared with the much larger trading loss suffered by another French bank, Societe Generale, earlier this year.
Their concern remained although Banque Populaire had ensured that the merger would go as planned despite the leadership reshuffle at the Caisse d'Epargne.
Source: Xinhua
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