AIB probe: 'This is a heavy blow'

AIB chief executive Michael Buckley has said the suspected fraud at a US subsidiary is "a very heavy blow".

The affair centres around a single trader in the foreign exchange division at AIB’s Allfirst Financial Inc, one of the 50 largest banks in the United States, and involves €866m.

The individual caught up in the affair, who is based in Allfirst’s headquarters at Baltimore, Maryland, has since disappeared and a number of other senior executives at the bank have been suspended pending investigations by AIB and the FBI.

One of the suspended staff is Irish.

Allfirst has 300 branches and 6,500 staff.

Chief executive Michael Buckley, said in Dublin today: ‘‘It’s a very heavy blow to the bank.

‘‘This was a complex and a very determined fraud. We will be writing off the money in our 2001 accounts.

‘‘An investigation identified one trader as being at the centre of this and last weekend, as the net was closing in on the trader, he went missing and did not turn up to work on Monday morning.

‘‘We called in the FBI and sent a special investigation team out from Dublin to take responsibility on a day-to-day basis for Allfirst.

‘‘We have suspended a number of people in direct line above the trader involved, but that does not mean we suspect any complicity on their part. But it is good practice in this situation.’’

Mr Buckley insisted there was one important aspect in which it did not resemble the Nick Leeson affair.

‘‘What Nick Leeson did was cause terminal damage to Barings. But an important point I want to make is that even when we write off that 750 million dollars, we will be making a profit after tax for 2001.

‘‘This is a heavy blow to the bank, but it is by no means fatal and business will continue as usual as far as customers and staff are concerned.’’