SocGen faces up to hard truths after rogue scandal

The board will meet formally to ratify one of the biggest management shakeups in the bank's 144-year history. It will also finalise first-quarter results for publication tomorrow that financial experts predict will show it back on track after the devastating e4.9 billion (£3.7 billion) losses racked up by rogue trader Jerome Kerviel which it revealed in January.

Today's meeting will as usual be chaired by Daniel Bouton, who has been chairman of the bank for just over a decade. The 58-year-old offered to resign twice during the unravelling of L'affaire Kerviel and was turned down twice by the rest of the board.

But today's meeting is the first at which he is not both chairman and chief executive. If Kerviel did nothing else, he forced SocGen to abandon the Gallic version of corporate governance in favour of the more commonly held Anglo-Saxon view that the two top roles in a company should not be combined.

The new chief executive, who takes up the post today, is 44-year-old Frederic Oudea. He has been chief financial officer at the bank for the past five years, and is widely respected by his peers and analysts.

His replacement and a new face on the board was only announced on Friday. He is Didier Valet, 40, who has been in charge of strategic performance management for the past year but was previously head of investor relations.

While the age differences clearly indicate that the bank has jumped a generationthe changes are not as radical as have occurred at several Wall Street firms and at UBS as a result of the credit crunch.

Valet, Oudea and the former paratrooper Jean-Pierre Mustier, head of investment banking, all attended the same elite Ecole Polytechnique engineering college. Oudea and Bouton both served in senior positions in France's finance ministry before moving across into banking.

The fact that Bouton remains as chief executive is testimony to the French business community's loyalty to its own. It will almost certainly be him and not Oudea who attends the weekly lunch at Maxim's held by Le Club des Cent - a much more jolly affair than Britain's equivalent Hundred Group.

No doubt the other members of the 96-year-old Club have raised the odd glass to Bouton for the way he has seen off that upstart little man, the French President Nicolas Sarkozy, who is as unloved by big business as he is by the farmers of Normandy.

Sarkozy waded into the Kerviel scandal, announcing that he could not see how Bouton could possibly hold on to his post. He said: "When the chairman of a company experiences a disaster of this magnitude and he does not assume the consequences of this, that is not normal."

French business's riposte, coming from Laurence Parisot, head of employers' organisation Medef, was swift: "Only the members of the SocGen board are in the position to say if he is the best general or not - it is certainly not up to politicians to say." Indeed Bouton has scored one notable success. Barely two weeks after the scandal broke, he launched a e5.5 billion rights issue, which successfully shored up the bank's balance sheet.

As with any good general, it was a mixture of luck and good leadership. Underwriters insisted he stay in place if they were to put up the money and his timing was fortuitous. January and February (when he launched the rights issue) were tough but not terrible months for investment banks. He had to issue the shares at a discount of almost 40% to the prevailing price.

But March, as many rivals have told us in recent days, was a far worse one as the credit crunch struck harder. In the UK, Royal Bank of Scotland and HBOS which launched cash calls for £12 billion and £4 billion respectively last month, had to sell their new shares at a discount closer to 50%.

Bouton has also seen an eye cast over his bank not just by French rivals but also by foreign ones such as HSBC. All have looked and, as much because of the French attitude to foreign ownership as what they might be fearful of finding on the balance sheet, have walked away.

SocGen has already told investors that tomorrow's first-quarter earnings will "reflect the sustained confidence of our clients, the group's resilience and once again the benefits derived from a balanced portfolio of activities in a difficult environment".

Analysts believe the bank will come out with after-tax profits of about e990 million compared with e1.43 billion the first quarter of 2007. The Kerviel losses have already been taken in the final quarter of 2007, although there are bound to be some further toxic-loss writedowns - perhaps another e800 million.

But what investors will be looking for most closely is the effect of the rogue trader scandal on the bank's ongoing business. Today may only be the opening line of a new chapter at Soc-Gen but the betting is the book still has a long way to go.