OREANDA-NEWS. January 26, 2008. Societe Generale, the banking group to which BSGV belongs, discovered during the last week-end an important fraud in one of its trading desks in stock markets (speculative positions with derivative products had been concealed through sophisticated mechanisms). In selling the unduly taken positions, SG has suffered a loss of EUR 4.9 billion, that will be deduced from its 2007 results.

Due to that trading loss, SG Group results for 2007, which otherwise would have been very good (especially taking into consideration the general circumstances derived from the "sub-prime crisis"), will be sharply reduced. Nevertheless, they will remain positive at between EUR 600 and 800 million, which shows the soundness of the Group and the good level of profitability of its portfolio of activity, despite of the on-going international crisis.

The solidity of the Group will be further reinforced by an equity increase of EUR 5.5 billion, to which a syndicate of banks has already subscribed. That equity increase will not only strengthen the already good level of capital adequacy ratio of the Group, but also allow it to finance in better conditions its continuous expansion and its investment projects. Also, the fact that the Group has been able to set up such a huge capital raising in only 3 days, proves that its reputation and stability remains intact.Recent events should have no significant impact and the Group’s commitment towards Russia remain as strong as ever:

    * The takeover of Rosbank will go on as planned.
    * BSGV’s expansion plans remain unchanged.

The Group has been experiencing a bad surprise, but the origin of the problem is clear, the impact has been perfectly measured and necessary actions have been taken. On the whole, the fact that SG Group’s results will still be positive shows the deep soundness of the Group’s activities and a high level of resilience. Additionally, both an existing high level of equity and the announced future capital increase will allow SG to go on developing.