Societe Generale uncovered a $7.14 billion fraud, one of history's biggest by a single futures trader who orchestrated a series of bogus transactions that spiraled out of control amid roiling markets last week, the French bank has said.

Societe Generale has a branch in Ghana called SG-SSB.

The Executives of the bank said the trader, a French man in his 30s, acted alone.

CEO Daniel Bouton said the trader's motivations were "irrational" and that he may not have benefited directly from the fraudulent deals.

The bombshell announcement destabilized a major bank already heavily exposed to the sub-prime crisis and rattled the global banking sector.

France's second largest bank said it will seek 5.5 billion euros ($8.02 billion) in new capital.

Trading in Societe Generale's shares, which have lost nearly half their value over the past six months, was suspended last Thursday morning.

Trading resumed midday and shares dropped 5.5 percent to 74.77 euros ($108.97).

Societe Generale said it detected the fraud over the weekend at its French markets division.

The trader had misled investors in 2007 and 2008 through a "scheme of elaborate fictitious transactions," the bank said.

The trader, who was not named, used his knowledge of the group's security systems to conceal his fraudulent positions, the statement added.

The man confessed to the fraud, the bank said, and has being dismissed.

His supervisors were to leave the group.

Bouton offered his resignation but it was rejected by the board. Bouton said the fraud was uncovered after the crisis on world markets began late last week, as the trader rushed to close fraudulent positions.

The man had worked for the bank since 2000 and earned a salary and bonus of less than 100,000 euros ($145,700), executives said.

"I'm convinced he acted alone," said Jean-Pierre Mustier, chief executive of the bank's corporate and investment banking, who interviewed the trader when the fraud was uncovered.

The trader was responsible for basic futures hedging on European equity market indices, the company said, making bets on how the markets would perform at a future date.

“Detecting the fraud over the weekend was problematic because world stock markets on Monday and Tuesday fell hugely around the world," said Janine Dow, senior director at Fitch Ratings financial institution group in Paris.

The fraud appeared to be the largest ever by a single trader.

If confirmed, it would far outstrip the Nick Leeson trading scandal in 1995 that bankrupted British bank Barings. Barings collapsed after Leeson, the bank's Singapore general manager of futures trading, lost 860 million pounds – then worth $1.38 billion – on Asian futures markets, wiping out the bank's cash reserves.

Source: AP