Calyon, the investment banking arm of Crédit Agricole, cautioned that its third-quarter results would be hit by a €250 million (£174 million) charge after rogue traders in New York built up a huge unauthorised credit position.

The French bank said the charge, and turbulent trading conditions this month, would mean its third-quarter earnings would come in “significantly below” the same period a year ago.

Calyon said that on the evening of September 4, the bank’s senior management was told about the existence of an unusually large market position on the books of its proprietary trading desk in New York.

The bulk of the position had been built up at the end of last month and was centered on certain credit market indices, which Calyon did not name, although it stressed that none of the trades was linked to the US sub-prime mortgage sector.

The position was built by its proprietary trading desk, which uses the bank’s own balance sheet to take bets on stocks, bonds and indices. In recent years banks have been making greater use of proprietary trading to drive revenue and profits.

In this instance, however, the trade was executed above the authorised limit and without the authority of the bank. As of yesterday, the position had been brought back within the bank’s normal trading activities, it said.

A spokeswoman for Calyon declined to comment on the identity of the six traders who built up the position, although it is understood they were immediately dismissed.

Calyon said: “The relevant disciplinary measures have been taken vis-à-vis the individuals concerned. The trading limit alert and security controls were immediately strengthened in order to prevent any such incident happening in the future.”

The bank said it would be forced to take a one-off charge of ¤The<NO>A spokeswoman said the profit warning had been exacerbated by the rogue trading charge.

Calyon said: “In the context of a more turbulent trading environment in September, contrary to July and August, Calyon’s third-quarter net result is likely to come in significantly below that of the same period in 2007 but nonetheless remain in profit.”

Times Recommends

• US stocks fall below 9,000 mark
• House price fall smallest in seven months
• Wary investors opt to keep cash in safes