Managing Globalization
Will bank bosses pay the piper?
As the Société Générale scandal unfolds, let’s put aside the lurid story of the rogue trade himself and ask what will happen to the rest of the bank. Emerging details suggest that Société Générale had some of the right safeguards in place, yet they didn’t work correctly. So whom else will Jérôme Kerviel drag down with him?
His immediate superiors are sure to come in for scrutiny, both from prosecutors and from their own bosses. Any laxity is likely to result in lost jobs - but bankers who generally make money for their employers but slip up on an administrative matter, even a big one, usually find new positions. Then there’s the top brass. They won’t resign, of course, but the huge loss that Kerviel’s trading inflicted on Société Générale has made it a takeover target. And, in the event of a buyout, you can bet that the bosses who presided over the scandal will be replaced.
You can also bet that other banks will be beefing up their security protocols as their own executives begin to feel a bit nervous. In fact, sometimes it takes a momentous event - like an Enron - to bring practices up to date. If that’s the case here, investors may hope that the Société Générale scandal does claim a few more heads, and big ones. The damage to the bank has been done; now it’s just a question of how much good it does for the rest of the industry.
