Updated on Friday, January 25, 2008, 00:00 IST

New Delhi, Jan 25: French President Nicolas Sarkozy on Friday country's strong banking system would not be affected by the 7.1 billion dollar fraud unearthed in Societe Generale, news of which had a pull down effect on the Indian stock market.

SocGen, France's second largest lender, had yesterday disclosed the fraud committed by a trader at its futures desk, while noting that it would have to raise USD 7.1 billion capital as a result of these fraudulent activities and a sub prime-related crisis write-down of about USD 2.99 billion.

When asked about the impact of the fraud, Sarkozy told reporters at a joint press conference with Indian Prime Minister Manmohan Singh here that it was an internal fraud and could not affect the "solidity and reliability" of France's financial system.

"We will not be affected. No way it can affect the stability of the French banking system," he stated.

The markets across the world, including India, reacted strongly to the news of fraud, billed as one of the biggest in the world's banking history. The Indian stock market benchmark had shed 372 points yesterday after opening strongly.

About the recent turmoil in global financial markets, Sarkozy said, "the crisis is radiating out of us sub-prime issue so there is need for more transparency and less regulation. The situation can't go like this."

Bureau Report