Societe Generale denied on Monday a newspaper report that it wrote down 5 billion euros ($6.6 billion) in assets last year as a result of trading at a unit and was left with a similar amount of toxic products.

The alleged write-down, which was reported on the front page of French newspaper Liberation, was of around the same size as SocGen's 4.9 billion euros loss in a rogue trading scandal last year involving former employee Jerome Kerviel.

The bank said the report was unfounded.

France's AMF financial market regulator had no immediate comment on the situation.

Societe Generale formally denies Liberation's assertions published today, the company said in a statement.

However, the media report caused the bank's shares to fall in early morning trade.

SocGen shares were down 3.7 percent at 36.97 euros, underperforming a 2.8 percent fall in the broader DJ Stoxx European bank sector <.SX7P>. Rival French banks BNP Paribas and Credit Agricole fell by around 3 and 4 percent respectively.

There is no smoke without fire, said Agilis Gestion fund manager Arnaud Scarpaci.

While Liberation said no one had been accused of committing any crime over the write-downs, it said the case could end up costing the bank as much as 10 billion euros.


SocGen reports first quarter results on May 7. On March 31, the bank said it expected extra writedowns for the first quarter but added that these would be at a manageable level.

The French bank has borne the brunt of a wave of negative newspaper articles in the wake of last year's Kerviel scandal.

Last month its top managers gave up stock options following a public outcry, led by President Nicolas Sarkozy, over the fact that money received from the French state to help it through the financial crisis could be used to remunerate executives.

After the Kerviel affair, the other Societe Generale scandal, said the Liberation front-page banner headline, adding information on the case was buried in annexes to company reports.

After examining figures published by Societe Generale, Liberation said it had uncovered massive losses at SGAM Alternative Investments, part of the bank's asset management arm, SGAM.

Operations at the unit left the bank with 10.4 billion euros in toxic assets at the beginning of 2008, Liberation said, describing the products as unsellable.

After a series of write-downs, the assets were valued at 5.3 billion euros by the end of the year, the newspaper said.

Having made losses on their positions by autumn of 2008, managers at SGAM Alternative Investments bet that the downturn would be short-lived, leading to further losses, it added.

Everyone knows that the remaining 5.3 billion euros are worth nothing, the newspaper quoted one analyst as saying.

SocGen, however, said the newspaper had got some fund transfers mixed up.

Liberation has mistaken the amount of assets transferred in 2008 from SGAM's (investment vehicles) toward Societe Generale for losses, the company said.

SGAM's losses for 2008 amounted to 258 million euros after tax and bear no relation to what the journalist is asserting, SocGen added.

Liberation also said that the bank had only announced 1.2 billion euros in losses so far.

Even though until now the bank has recorded 'only' 1.2 billion euros in losses, the final bill could reach 10 billion, the newspaper said.

SocGen and Credit Agricole announced in January that they had agreed to merge their asset management units.

SGAM Alternative Investments was not part of that deal.

($1=.7604 Euro)

(additional reporting by Matthieu Protard and Pascale Denis)

(Editing by Diane Craft and Marcel Michelson)