(Agencies)
Updated: 2008-01-27 08:22

The Societe Generale headquarters in Paris. [Agencies]

"What happened at Societe Generale is certainly not a disaster that resulted from our strategy. It is more like an accidental fire which destroys a large factory at an industrial plant," Bouton said.

Kerviel worked in the investment bank division, moving from the middle office, which checked deals, to the front office trading desk in 2005. Bank sources said his earlier job gave him knowledge of how to get round internal checks.

An advisor to the French president revealed that Kerviel had held positions of over 50 billion euros on share futures - more than the bank's market capitalisation of 35.9 billion euros.

The case dwarfs that of Nick Leeson, the original "rogue trader" who lost 1.5 billion dollars at Barings, causing the failure of the British bank in 1995.

Spiegel-Online, the website of German weekly Der Spiegel, said Kerviel negotiated 140,000 contracts "a few weeks ago" on the Eurex derivatives market, a Swiss affiliate of the German bourse.

With the DAX falling more than 600 points between the beginning of the year and January 18, Kerviel would have probably lost some two billion euros (2.8 billion dollars), Spiegel-Online said, quoting experts.

It added that Societe Generale had been alerted to the losses by German sources.

Societe Generale started selling Kerviel's positions at the start of last week after it found out about the losses.

But Bouton rejected as "absurd" media suggestions that Societe Generale's high-volume sales of the tainted positions may have helped push the US Federal Reserve into an unprecedented rate cut on Tuesday.

Described by work colleagues as a shy, hesitant character, Kerviel's resume depicts him as a judo and sailing fan who once ran for municipal office in his hometown of Pont l'Abbe in western France.

An aunt, who lives in Pont-l'Abbe, told AFP that her nephew "must have been manipulated."

"They are an honest family, who have nothing to reproach themselves for. The young man has always been serious, reserved," Sylviane Le Goff said.

"In my opinion, it is his bosses and employers who should be looked into," she said, adding that her sister had gone to Paris on Thursday to try and "comfort" her son.

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