Jérôme Kerviel, the trader accused of losing €4.9bn ($7.2 billion) through unauthorised dealing at Société Générale, France's second-largest lender by market value, remains in custody for police questioning.

Société Générale said the losses – the biggest in the bank’s history – occurred when Kerviel set up positions in futures linked to European stock indexes and hedged them with fictitious trades.

The positions were in balance at midday on Friday January 18 but European stock markets fell at an average of about 2% that day and Société Générale managers did not become aware of the fraud until the following Monday when the losses had ballooned to €4.9bn, Bloomberg reports.

Last Saturday, Daniel Bouton, Société Générale chairman, maintained Kerviel acted alone, but Jean-Pierre Mustier, head of the bank's investment banking arm, said Kerviel’s superiors had challenged his trades and missed several opportunities to stop him.

‘He was always rolling one transaction into another,’ Mustier told the Financial Times. ‘If he was ever caught, he just said it was a mistake and would start putting the trade somewhere else.’

Further reading:

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Société Générale announces massive write-down - and fraud

Read story in the Financial Times