Societe Generale bank shares slump on recapitalisation rumours

PARIS, October 20, 2008 (AFP) – Shares in French bank Societe Generale slumped in morning trading here on Monday, showing a loss of 10.17 percent to 40.69 euros on rumours that the bank needs new capital.

The shares showed a loss of about 12.0 percent at one point. The overall Paris market was showing a gain of 1,41 percent on the Cac 40 index.

One analyst, who declined to be named, said the shares had fallen because of rumours the bank needed to strengthen its shareholders’ funds, as already suggested in a note from brokers Merrill Lynch last week.

Societe General declined to comment when contacted by AFP. At the beginning of this year the bank was put at the risk of failure by unauthorised trading which cost it 4.9 billion euros (6.6 billion dollars), and it made an emergency capital increase of 5.5 billion euros which was heavily over subscribed.