The French government has vowed to defend Societe Generale against hostile takeover bids.
Finance Minister Christine Lagarde said the bank was is 'in a crisis situation' as she added to pressure on bank chairman Daniel Bouton over the handling of the €4.9 billion losses blamed on junior trader Jerome Kerviel.
French Prime Minister Francois Fillon added that the government would not allow Societe Generale to be the target of hostile raids by other banks.
France's top two banks BNP Paribas and Credit Agricole are said to be poised to pounce on Societe Generale, France's third biggest bank.
Kerviel, 31, was placed under formal investigation yesterday for breach of trust, using false documents and breaching computer laws. The prosecution is a appealing against a decision by judges to release Kerviel on bail.
The spotlight is now moving to the bank's chairman, with French President Nicolas Sarkozy suggesting Bouton should be held accountable for the biggest losses in the history of investment banking.
'We are in a system where, when you have a big salary, which is without doubt legitimate, and there is a big problem, you cannot escape your responsibilities,' Sarkozy said late night.
The bank meanwhile rejected claims that an American member of its supervisory board, Robert Day, had inside information about the rogue trader losses when he made two major share sales this month.
The bank said in a statement that Day 'was not advised' about the colossal losses when he sold €40.5m worth of shares on January 18, when suspicions of unauthorised trading first emerged, and €85.7m in shares on January 9. Two foundations linked to the American investor also sold shares on January 10.
A group of 100 Societe Generale shareholders yesterday filed a law suit alleging insider trading and manipulation of share prices, while two other groups of small shareholders are also taking legal action.
Kerviel is the only Societe Generale employee to have been placed under formal investigation in the case. He faces charges of breach of trust, falsifying and using false documents and breaching computer procedures. But investigating judges did not approve the more serious charges of fraud.
