Natixis Said to Have Examined Risk Executive's Share Sale

(Bloomberg) -- Officials at one of France’s biggest lenders have moved to quell internal concerns about a stock disposal by its chief risk officer just one month before the bank disclosed a large trading loss, people familiar with the matter said.

Senior officials at Natixis SA addressed employees’ questions about the trade at a series of meetings this month, according to the people, who requested anonymity. The bank said it found no wrongdoing. The timing of the sale by Pierre Debray had raised concerns about the strength of Natixis’s compliance procedures, one of the people said.

Debray, a member of the senior management committee at Paris-based Natixis, sold stock worth about 166,000 euros ($188,000) on November 14, when the bank’s shares were trading at 5.13 euros, according to a Nov. 16 filing. After Natixis revealed the loss in December, the shares fell for five straight trading days to 3.94 euros on Dec. 27, the lowest in more than two years.

Natixis, the fourth-largest listed bank in France, has taken market share from rivals in recent years, in part by expanding in markets such as Asia. As markets around the world tumbled in the final months of the year, the firm flagged on Nov. 9 that it was “facing challenging market conditions in some geographies in Asia.’’ It later revealed losses and provisions of nearly $300 million related to South Korean products called autocallables on Dec. 18.

The shares have recovered their losses since then, and were trading at 4.55 euros at 2:36 p.m. in Paris on Friday. Natixis shares fell 38 percent in 2018, one of the worst performers in the 39-member Bloomberg Europe Banks and Financial Services Index.

Natixis Said to Have Examined Risk Executive's Share Sale

Senior executives overseeing risk typically know about losses incurred on trading positions as soon as they happen.

“It’s a credibility factor for management,” said Peter Hahn, a professor at the London Institute of Banking and Finance. “The image factor should have been considered,” he said, referring to the perception of selling shares at a time when the company was going through a challenging period.

Debray had decided to dispose of the shares several weeks before he did so, people familiar with the matter said.

Natixis said that Debray’s action broke no rules. Debray referred to Natixis’s statement that the sale followed internal rules, declining to comment further. A spokeswoman at France’s financial regulator, the Autorite des Marches Financiers, declined to comment.

“Sales of shares by Natixis senior management are strictly controlled,” Natixis spokesman Benoit Gausseron said. “This sale followed precisely the relevant rules and procedures and was made in full transparency with the AMF.”

The disposal was Debray’s first share sale since he became chief risk officer in October 2017, AMF records show.

Banks’ chief risk officers have grown in prominence since the financial crisis. A typical CRO is responsible for managing a wide range of potential threats, overseeing trading positions, regulatory issues and troubled borrowers, and is likely to receive a daily update on outstanding risks.

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