French Economy Minister Christine Lagarde said today that Societe Generale, hit by $7 billion in losses from rogue trades, was under no pressure to merge with another bank as its shares plunged. "Societe Generale is under no constraint to merge with another financial company," Lagarde told France 2 television. The trader blamed for the scandal, 31-year-old Jerome Kerviel, remained in custody, helping an investigation into how he kept his supervisors in the dark while losses piled up, prosecutors said. Kerviel handed himself in on Saturday. SocGen's shares tumbled on Monday after Citigroup said the French bank's franchise was "severely impaired". The shares fell by 9 percent in early trading and by 1022 GMT were trading 7.2 percent lower at 68.55 euros. Citigroup also speculated that British-based bank HSBC, which already has a big retail and commercial banking presence in France, might be interested in buying SocGen. Lagarde's statement was the latest sign that France's establishment is rallying round to SocGen's defence in an attempt to stave off talk that a foreign rival might launch a takeover bid for the company as its market value sinks. A top adviser to President Nicolas Sarkozy warned on Sunday the government would probably intervene if raiders made a move. "I don't think the state would remain with its arms crossed if someone, whoever the predator, tried to take advantage of the situation,"Henri Guaino told French television. However SocGen and the Bank of France are facing political flak from France's leaders, furious at being left in the dark while SocGen sought a capital boost and unbundled its massive loss-making positions with only central bankers in the loop. SocGen's chairman, Daniel Bouton, who last week offered to leave but was asked to stay on by the board, said on Monday his resignation remained on the table, suggesting he may feel he has to go as criticism mounts of his handling of the crisis. Bouton went to London on Monday to drum up support for the bank's 5.5 billion euro emergency share issue, which has already been underwritten by two U.S. investment banks. "LYNCHING" After lying low for several days, Kerviel hired a new lawyer who hit back at SocGen's suggestions that he alone had masterminded the world's biggest trading scam from his desk. "He has not embezzled anyone, he hasn't taken a cent for himself and he was just doing his job as best he could," Christian Charriere-Bournazel told Reuters. He said Kerviel had been doing a trader's job by taking on risk, and accused the bank of setting him up for a "lynching". Police may release Kerviel later on Monday or, more likely, take him before an investigating magistrate who will decide whether to place him under formal investigation. Police cordoned off the headquarters of France's financial investigators, suggesting Kerviel would be brought before a judge, who could decide to keep him in further custody. Four days after stunning world finance with news that a lone, lowly trader had punched a hole in its compliance systems and forced the bank to seek a lifeline of new capital, SocGen set out in detail how it says he took dizzying risks undetected. Like rogue trader Nick Leeson who sank Britain's Barings bank in 1995, the picture that emerged from Kerviel's employer on Sunday was of a young man trained by his own bank to detect fraud and then using these skills to work around controls. BAFFLED The bank says it remains baffled as to why one of its more junior trading staff put his career and the bank at risk. "We don't know, we don't understand and it will be for the legal inquiry to find out," corporate and investment banking chief Jean-Pierre Mustier said. Although SocGen prides itself on state-of-the-art finance using mathematical models, its rogue trader was using "very simple instruments" as a vehicle for his deals, which he then hid using high-tech smoke and mirrors, according to Mustier. He was able to get away with it partly because SocGen's risk systems do not check up on unregulated, over-the-counter contracts straightaway if no deposit is required, the bank said.