Under the scrutiny of financial regulators worldwide, Société Générale, a prominent French banking institution and the nation’s third-largest by assets, has entered into an agreement to settle allegations of misconduct totaling $1.34 billion. This sum was paid to U.S. authorities on June 4, 2018, in a settlement that encompasses two distinct areas of concern: manipulation of the London Interbank Offered Rate (LIBOR) and bribery of Libyan officials. The settlement, while substantial for a bank of Société Générale’s size with a total asset value of $1.813 trillion, is not insignificant.
It represents a specific figure arrived at after investigating two separate instances of wrongdoing. The implications of LIBOR manipulation extend far beyond the bank involved, as the rate serves as the foundation for trillions of dollars in loans, mortgages, and derivatives worldwide.
Any attempt to manipulate this rate carries the potential to cause significant disruption within the global financial system. Société Générale is not the first, nor will it be the last, institution to face such allegations. However, the U.S. authorities’ findings in this particular case were deemed severe enough to warrant a penalty of this magnitude.
The bribery allegations involve payments made to Libyan officials to secure business, a practice that is illegal and unethical. Post-Gaddafi Libya presented a chaotic environment for Western banks, with competition for access and deals reaching unscrupulous levels.
Among the banks that crossed the line, according to the regulators, was Société Générale. The bank’s direct supervision is overseen by the European Central Bank, having been designated a Significant Institution since European Banking Supervision came into effect in late 2014. This designation means that the ECB monitors the bank’s risk management, capital levels, and compliance systems.
However, the misconduct leading to this settlement occurred during the bank’s period of supervision, raising questions about what was observed and when. The specifics of Société Générale’s defense are not publicly disclosed in the settlement report.
It merely states that the bank did not admit wrongdoing, and the claims have been resolved. For a systemically important bank like Société Générale, a fine of this magnitude is considered a part of doing business. It is not existential, and the bank will continue to operate, under ECB supervision, and remain on the Financial Stability Board’s list of banks whose failure could pose a risk to the global financial system.
The settlement marks a significant addition to Société Générale’s history, dating back to 1864. It is now etched with a specific entry: June 4, 2018, $1.34 billion, LIBOR and Libya.
This fact will feature in future reports, analyses, and comparisons, serving as a data point of significance.
Related Stories
Rabobank Pays $1.07 Billion for LIBOR-Rigging Scheme
Rabobank Pays $1.07B for Libor Rigging in 2013
UBS Pays $1.5 Billion in LIBOR Rigging Penalties #SocieteGeneralePays #LIBORRigging #Bribery #CorporateCrime #News
