The investment banking arm of Credit Agricole, Calyon, has warned that its results in the third quarter are subject to a $347.5 million charge after rogue traders in New York built up unauthorised credit. The French bank says that earnings will be down on last year’s figures.
A substantial position was built by the proprietary trading desk, which uses the bank’s balance sheet to take bets on stocks, bonds and indices. However, the trade was executed above the authorised limit and without authority from the bank, leading to the subsequent crisis.
“The relevant disciplinary measures have been taken vis–vis the individuals concerned. The trading limit alert and security controls were immediately strengthened in order to prevent any such incident happening in the future.”, a Calyon spokesperson says, speaking to the Times.