Societe Generale Cooperating in Libor Probe

Industries Reuters

French bank Societe Generale is cooperating with U.S. authorities investigating an interest-rate fixing scandal, while the bank's own internal probe is also continuing, the bank's chief executive said on Wednesday.

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"We have not received at this stage any allegation by any regulator. We are cooperating with them," Frederic Oudea told journalists on the sidelines of a financial conference.

Oudea said he was referring primarily to the U.S. authorities investigating potential malpractice in how banks set the London Interbank Offered Rate or Libor interest rate, which is used as a reference for more than $500 trillion of financial contracts around the world.

Oudea said he had not heard from French prosecutors about the case and declined to comment on developments in Switzerland, where authorities are also probing banks.

Societe Generale's internal probe would take time, he added, declining to say when he thought it might be completed.

"You should understand that it means reviewing hundreds of thousands of mails and phone calls; it is a huge task," he said.

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The Libor rate is compiled from estimates by large banks of how much they believe they have to pay to borrow from each other.

Regulators in a number of countries, including the United States and Britain as well as the EU are examining whether some banks may have colluded in setting the benchmark rate.

British bank Barclays Plc <BARC.L> was the first big bank to settle with U.S. and British authorities over the affair.

The European Commission, the EU's executive, began talks with the finance industry on Wednesday to examine the possibility of imposing curbs on benchmark indices after the rigging came to light.

CONFIDENCE BUILDING

Oudea said banks needed to redefine their business models, in light of tougher bank capital rules, to maintain their role in financing the economy, and praised the current French government's "realistic and pragmatic" approach to the sector.

He also said proposals to construct a banking union and single banking supervisor in Europe would be a welcome help to rebuild confidence shaken by the crisis.

The comments were more upbeat than some he made in June, when he told Le Monde newspaper that a banking union would not answer the problem of a crisis in confidence in sovereign debt.

There was "nothing new" to report on SocGen's plans to sell its Greek unit Geniki to Piraeus Bank <BOPr.AT>, Oudea said, repeating that talks between the two were at an advanced stage.

"It is not a big issue. The subsidiary is well funded and we are not under pressure to sell," Oudea said, adding that a deal would need a series of approvals to go ahead.

In Egypt, SocGen has received an expression of interest from Qatar National Bank <QNBK.QA> to buy SocGen's National Societe Generale Bank <NSGB.CA> unit but the process is likely to take weeks or months, Oudea said.

"It is very premature and the deal is absolutely not done," Oudea said, pointing out that Egyptian regulators must give their approval before the data room can be opened to an interested party.

"The process has been launched, that's all," he said.