Kerviel 'was trying to conceal €1.4bn profit'

Jérôme Kerviel, the man accused of masterminding a record rogue trading loss, was caught in the process of trying to cover up a hidden €1.4 billion profit he made for Société Générale last year, people involved in the French bank's inquiry said.

Financial Timesinterviews with SocGen executives, board members, investigators and rival bankers found that Mr Kerviel delayed the settlement date on the profitable trades to stop the bank receiving a surprise €1.4 billion gain that would have exposed him.

The 31-year-old trader, who rose through the ranks at SocGen to reach its prestigious equity derivatives trading floor in 2005, made bigger and ultimately loss-making trades in early January that the bank suspects were designed to cover up his earlier profit.

"His trading early this year was possibly to hide the previous gain," François Martineau, SocGen's lawyer, said.

Mr Kerviel's decision to delay the payment of a €1.4 billion profit - worth about half the profits of the entire investment bank - shows how his complex and increasingly frantic system of hidden but colossal bets on European stock markets was coming undone.

"Maybe he was trying to lose the profit he made in 2007," said Jean-Marie Mustier, SocGen's head of investment banking, who questioned Mr Kerviel for nine hours with a team of 15 staff soon after his secret trades were discovered.

Mr Kerviel was eventually caught when the bank questioned a falsified €30 billion futures trade on Germany's Dax index with Baader Bank, a mid-sized German market maker, which was too small to handle a trade of that size.

Meanwhile, SocGen is expected to decide after markets close today what discount to offer to investors in its €5.5 billion rescue fundraising, designed to repair the hole in its balance sheet left by Mr Kerviel's dealings.

The rights issue is due to be launched on February 21st, the day of the bank's results.

It is understood that at least 15 banks have signed up to the underwriting syndicate, including Credit Suisse, Merrill Lynch, and Calyon, owned by Credit Agricole, which is mulling a bid for SocGen.

The success of the issue could depend on the future of Daniel Bouton, chairman, who has come under fierce political pressure to stand down, said one person close to the situation.