Groupe Caisse D'Epargne, one of France's biggest savings bank, made a €600m loss when the market crashed last week after a team of derivatives traders took unauthorised positions.

Caisse D'Epargne said normal internal controls had picked up the loss and that sanctions had been taken against the individuals concerned. The French regulator has also been informed.

"Due to the extreme volatility in the markets and the market crash of last week, the Groupe Caisse d'Epargne has had a significant market incident in share derivatives that has led to a loss in the order of €600m," it said in a statement.

It added that it had assets of more than €20bn and the loss would not impact its financial solidity nor would it affect customers.

The loss occurred in the bank's proprietary trading division which is in the process of being closed down following a decision taken in June.

Instructions were issued to team heads to limit exposures but the team of four to five traders allegedly exceeded their limits and were caught out by last week's stock market crash.

It is understood that some of the individuals concerned have been fired and others moved to different positions.

Caisse d'Epargne said it made the discovery following the start of its merger talks with Banque Populaire. The two banks are majority shareholders in investment bank Natixis. It said the loss would be taken on the profit and loss account.

The bank, which is mutually-owned and is not listed on the stock market, reports results twice a year. The loss will appear in the second half results, to the end of December 2008.

This is the third rogue trading incident to have emerged in France in the past year. In September 2007, Credit Agricole, the third largest bank, reported a €250m trading loss due to a rogue trader in its US operations.

In January this year, Société Générale, the second largest bank, took a €4.9bn loss after Jérôme Kérviel, a marketmaker who placed €50bn of allegedly unauthorised trades on three European futures markets.