Societe Generale fights back with internal
Societe Generale is setting up an internal team of "hackers" to stress-test its information technology and risk management systems as part of a €50m bank-wide initiative to tighten its risk controls after falling victim to a trading scandal.
The French bank has set up a dedicated department to focus on the security of its operations and fraud control to prevent a repeat of the alleged trading fraud committed by Jerome Kerviel which led the bank to take €4.9bn of losses and launch an emergency rights issue last week.
The bank said the team, a combination of current staff and external specialists will form part of a wider initiative aimed at regaining the trust of its clients, staff and shareholders. The team will report to Jean-Pierre Mustier, chief executive of SG corporate and investment bank, and Philippe Citerne, co-chief executive of Societe Generale.
Mustier said the team will be deployed in a way which is similar to IT companies using internal hackers to test systems. Mustier said: "In corporate and investment banking we must reassure our clients, our staff and our shareholders. We are learning the lesson and have launched an internal initiative called Fighting Back."
A spokeswoman for
Societe Generale said: "We have about 100 staff working on this aided by specialists who have an understanding of fraud techniques." The dedicated function will work alongside the business in order to supervise operational risk and the risk of fraud.
"They will be able to rely on a specialised team that will be checking the risk of fraud in all of our activities." The investment bank has scaled back its proprietary trading activities while it implements the initiative. The initiative includes increasing IT security, including more frequent changes of password and access control to sensitive applications.
Source: Financial News
Date: 19.02.2008 [ID: 167]