Caisse d’Epargne, the French savings bank, today admitted that it had lost €600 million (£466.3 million) through a "trading incident", becoming the third European bank since January to declare a huge loss related to deals involving derivatives.

The bank, which in the middle of merging with French rival, Groupe Banque Populaire, said today: ""Due to the extreme volatility of the markets and stock market crash in the week of October 6, Caisse d'Epargne experienced an important market incident in its equities derivatives activities, which translates to a loss of around €600 million."

Caisse d’Epargne said today it has suspended members of the team responsible for the losses.

Earlier this year, Societe Generale rocked European markets when it declared a €4.9 billion loss, following a series of trades by former employee, Jérôme Kerviel.

In March, Credit Suisse disclosed that a group of "rogue traders" had mispriced the value of some investments which, along with turbulent market conditions, forced the bank to issue a profits warning.

Earlier this month, Christine Lagarde, France's Finance Minister, was forced to deny speculation that Caisse d’Epargne was in funding difficulties after Le Canard Enchaine, the weekly publication, said the bank was facing a €6.5 billion gap in its capital base.

Caisse d’Epargne and its merger partner, Groupe Banque Populaire together own 70 per cent in Natixis, France's fourth largest bank.

A sharp fall in the Natixis' shares during its €3.7 billion in currently being investigated by French authorities to see if investors had contributed to the decline.

Natixis' shares are currently trading at €2.03 but Caisse d’Epargne holds the bank's stock on its books at €19.55 - the price at which its shares listed when it floated in 2006.

Citigroup recently said in a note Caisse d’Epargne's business model "looks increasingly challenged". It added: "We remain uncertain whether or not the parents of Natixis will have to recognise the impairment on their stake. We think if this were the case, it would reduce their ability to support Natixis."

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