Rogue trading losses E222m

ROGUE trading losses at National Irish Bank's Australian parent were $360m (€222m), double the amount forecast last week, the bank said yesterday.

National Australia Bank chief executive Frank Cicutto said an internal investigation blamed unauthorised foreign currency trading for the losses.

"The foreign currency traders exploited weaknesses in our internal procedures. We have identified those weaknesses and closed them," said Mr Cicutto.

The bank expects to complete its investigation by the end of next month and has already suspended four employees who were involved in trading foreign currency options in Melbourne and London.

Currency options allow banks or businesses with large foreign currency requirements to buy currency in the future at a pre-arranged rate. The value of these options can fluctuate sharply in line with currency rate movements. NAB said its investigation discovered a number of fictitious trades in its accounting system.

National Irish Bank (NIB) said its Dublin treasury operation, which employs 12 people, would be included in the group-wide review of procedures but that it was not involved in proprietary trading.

The Dublin office relies on NAB's London treasury to carry out pricing and risk management activity and is mostly staffed by relationship managers and sales personnel.

NAB said foreign exchange losses would not affect its dividend payout and that the losses should be seen in context of last year's pre-tax profits of $5.6 billion.