Société Générale (SocGen) has signed a liquidity agreement with Rothschild & Cie in a bid to control the volatility in its shares.
In a statement, the French bank says it has made €170 mn ($245 mn) available for the scheme, which will last for one year.
‘The idea is not to keep the stock price high but rather to keep it steady,’ says a spokesperson for the bank, reports Dow Jones.
SocGen has been hit particularly hard by the slump in equity markets, driven by rumours about the bank’s exposure to European sovereign debt.
On August 10, the bank’s shares slumped 15 per cent and it was forced to put out a statement denying market speculation about its financial strength.
The Daily Mail, a UK newspaper, has since apologized for a story it printed claiming the bank was in a ‘perilous’ state.
[Article by Tim Human, Inside Investor Relations]