UK's FSA says SocGen a "wake-up call" for banks

LONDON (Reuters) - The rogue trader scandal at France's Societe Generale is a "wake-up call" for all banks, Britain's financial regulator said on Tuesday, adding it was coordinating a UK response with fraud and crime agencies.

The Financial Services Authority (FSA) is working with City of London Police, the Serious Fraud Office and the Serious Organised Crime Agency to assess how vulnerable UK-based firms are and manage the response, said Lyndon Nelson, head of risk at the FSA.

The FSA had been consulting with authorities in France to get information on what went wrong at SocGen, and had been relaying that to its own firms.

"It's an interesting wake-up call for firms," Nelson said. "We know firms are taking it seriously and are reviewing internally their processes and relaying back to us."

SocGen, France's second-biggest bank, said on January 24 it had uncovered massive unauthorized stock trading by one of its employees that led to 4.9 billion euros ($7.2 billion) of losses. Jerome Kerviel, a 31-year old junior trader, is under investigation.

The FSA is asking firms about exposure in equities derivatives and other areas exposed in the "early days" of the SocGen crisis, Nelson said.

When asked how confident he was that a similar incident could not occur in Britain, he said: "It's the nature of the beast that you can never say never."

The FSA's Financial Risk Outlook 2008, released on Tuesday, warned that tougher economic conditions could increase financial crime or cut the resources available to tackle fraud.

"Tighter economic conditions could increase the incidence or discovery of some types of financial crime or lead to firms' resources being diverted away from tackling financial crime," the FSA said in the report.

The FSA beefed up its financial crime sector team last year, which includes about 25 staff.

(Reporting by Steve Slater and Clara Ferreira-Marques, editing by Will Waterman)