March 3, 2021

Source Sought for False Story on French Bank

That is the question that French politicians, business leaders and journalists — at least those who are left in Paris during the dog days of August — are asking, as they struggle to explain the plunge, which was accompanied by concerns about the country’s ability to pay back its debts.

The series, “End of the Line for the Euro,” looked at how a collapse of the single currency might play out, against the backdrop of French presidential elections next year. While the 12-part story was clearly labeled as fiction, it named real banks, like Société Générale, whose shares plunged 15 percent last Wednesday, prompting the bank to deny speculation that it was in financial trouble.

As market participants and journalists searched for possible reasons, the trail seemed to lead to London. There, The Mail on Sunday, a tabloid newspaper, had published an article in which it said Société Générale was “on the brink of disaster.” Société Générale and an Italian bank, UniCredit, were in a “perilous” state, the paper added, citing “a senior government source.”

Last Tuesday, two days after the report appeared, The Mail retracted it, writing, “We now accept that this was not true and we unreservedly apologize to Société Générale for any embarrassment caused.”

Readers of the fictional “End of the Line for the Euro” noticed that Société Générale and UniCredit were both named in the same passage in the series, in an imaginary conversation involving the hedge fund manager John Paulson, where he says that U.S. regulators have been raising concerns about the liquidity of the two banks.

On Wednesday, a journalist at the Reuters news agency, Natalie Huet, speculated about a possibility of a link between the tale in Le Monde and the story in The Mail on Sunday.

“The rumor of a collapse of SocGen could have come from a misreading of the summer series in Le Monde by The Daily Mail,” she wrote on the blogging site Twitter, referring to the weekday sister publication of The Mail on Sunday.

Ms. Huet subsequently clarified that her comment was based on the “words of traders” and was merely intended to relay a “funny and not impossible hypothesis.” She also specified that she had been commenting in a personal capacity and not on behalf of the news agency.

Ms. Huet did not respond to an e-mail requesting comment.

The story took off from there. On Thursday, the news agency Agence France-Presse asserted, in an article that it later killed, that the Le Monde series “was the source of false information that has largely contributed to Société Générale’s stock market drop.”

On Friday, the French economy minister, François Baroin, discussed the possible connection in a radio interview.

By the weekend, the talk had grown so loud that Le Monde was moved to defend itself in a front-page editorial by Erik Izraelewicz, its top editorial executive.

“The reality is that our fiction had nothing to do with this crazy rumor,” Mr. Izraelewicz wrote in the Sunday-Monday edition of Le Monde. “The paradox is that this case has come to illustrate something that our series denounced: the unacceptable role played by rumors in determining the fate of nations and businesses.”

In the series, the fictional collapse of the euro zone is fueled by market rumors — spread by British traders, to bring things full circle — that Germany intended to pull out of the euro zone. That set in motion a disastrous cycle of events.

The scrutiny comes at an awkward time for Le Monde, less than a year after it was taken over by a group of French business executives with links to the opposition Socialist Party, and less than a year before French presidential elections, which are set for next May. (In the fictional series, the voting results in disaster for the Socialists, who finish third behind the incumbent, President Nicolas Sarkozy, and the National Front leader, Marine Le Pen.)

Even before the series ran, from late July through early August, it was the subject of complaints from Le Monde journalists, who issued a news release to protest the decision by Mr. Izraelewicz to give the plum assignment to a reporter at La Tribune, a business newspaper that he previously edited. Mr. Izraelewicz was named to the top job at Le Monde in February.

Société Générale actually fared better in Le Monde’s fiction than another French lender, Crédit Agricole. That bank wrote a letter of complaint to the newspaper after it was portrayed as requiring a costly bailout.

The French market regulator, the A.M.F., is investigating the source of the speculation about Société Générale, which was accompanied by talk, denied by ratings agencies, that France’s triple-A credit status might be at risk.

Société Générale declined to elaborate on the nature of the investigation, which came at its request. “Regarding the unfounded rumors circulating on the bank, Société Générale received the public apology from the Mail on Sunday, recognizing that their article was not true, and the group made a request to the A.M.F. — which was accepted — to open an enquiry into the origin of these irresponsible rumors,” the bank said in a statement.

As for The Mail on Sunday, a senior executive, who insisted that he not be identified because he is not an official spokesman, dismissed talk of a link to the series in Le Monde. Neither the paper’s reporters nor its sources had been aware of “End of the Line for the Euro,” the executive said.

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