(Xinhua)
Updated: 2008-01-31 15:39

PARIS -- French bank Societe Generale's board on Wednesday kept Daniel Bouton as the bank's CEO, rebuffing French President Nicolas Sarkozy's demand for the bank's leaders to face up to their responsibilities for a trading fraud.

Daniel Bouton, CEO of French bank Societe Generale, reacts at a news conference at the bank's headquarters in La Defense, outside Paris, Jan. 24, 2008. [Xinhua]

The bank said that it was keeping its top people in place, asking Bouton and his deputy Philippe Citerne to stay on through the crisis.

"The board is asking me to stay at the helm of the boat during this storm," Bouton said in his first television interview on the crisis, "I am a man of duty. I'm not going to jump overboard when the board is asking me to stay to do my duty."

On reports that Societe Generale could be a takeover target, shares of the French bank closed up 4.3 percent Wednesday afternoon at 81.8 euros (US$121.15).

The bank's spokesman Laura Schalk said there was no discussion at the board's Wednesday meeting of a friendly takeover offer for the bank.

It would be "strictly no problem" for the bank to remain independent because it is still profitable, Bouton said.

The bank has twice backed Bouton, who offered to resign as the trading crisis unfolded last week which cost the bank a record loss of US$7 billion in bad debts.

Societe Generale also said that it had set up a special committee of independent directors to investigate the causes and sizes of the trading losses and look into whether the bank accurately communicated information about the scandal.

But the head of the nation's central bank Christian Noyer also questioned Societe Generale's ignorance and the controls under Bouton's watch of the scandal.

The bank's controls did not function like they should have and were not followed up appropriately, Noyer said.

The bank has been in turmoil since the trading scandal was revealed which is blamed on rogue share trades by Jerome Kerviel, 31, who had worked at Societe Generale in Paris since 2000 and earned a salary and bonus of less than 100,000 euros (US$145,700).

Kerviel has admitted having committed a certain number of acts to conceal reckless positions on the markets, according to prosecutor's office.

He said he started taking non-authorized positions at the end of the year 2005, but these positions were not of the same magnitude like the ones he took in early 2008.

He confirmed having acted alone in the acts under investigations, but said the practice of bypassing authorization by traders was not exceptional even if they concerned the volumes which he traded.

According to the latest information, he is facing preliminary charges related to "breach of trust," "forgery and using forgeries. "

Founded in 1864, Societe Generale, the country's second-largest bank, has to raise 5.5 billion euros (US$7.7 billion) in emergency capital to shore up its ravaged balance sheet, something it says has already been underwritten by other banks.

SocGen described the fraud as "exceptional in its size and nature," saying its full-year net profit would drop between 600 million euros (US$840 million) and 800 million euros (US$1,120 million) from 5. 22 billion euros (US$7 billion) in 2006, due to the fraud and losses in US subprime mortgages and monoline insurers.

In addition to the fraud, the bank announced a further write-down of 2.05 billion euros (US$2.87 billion) related to the credit crunch.