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AIB loss stands at $691M
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February 20, 2002: 9:26 a.m. ET
Ireland's biggest bank says 'rogue trader' lost $691 million, blows hole in profits
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LONDON (CNN) - Allied Irish Banks lost $691 million in the recent suspected currency fraud, it has revealed.
Ireland's biggest bank is scrambling to restore confidence and has appointed an independent investigator to probe the possible fraud at its U.S. business Allfirst Treasury. It suspected two weeks ago that trader John Rusnak had lost about $750 million in unauthorized currency trading.
Allied Irish Banks (AIB) said Rusnak's losses dragged the bank's net income down by 38 percent to  484 million ($424 million) last year, from what would have been a record 997 million.
Rusnak has denied stealing any money and has not so far been charged with any crime.
"The suspected fraud has been a substantial blow to all AIB shareholders," Chief Executive Michael Buckley said on Wednesday. "I am determined to spare no effort in repairing the damage we have suffered."
The Dublin-based bank admitted for the first time that the losses extended back to 1997, raising concerns about it's internal controls procedures that should have detected fraudulent activity.
"It's a little bit worrying that these losses extended back some 5 years," Scott Rankin, analyst at Davy Stockbrokers, told CNN. " But the good news is that the losses are no bigger than estimates."
Allfirst, AIB's Baltimore-based business, hired Svetlana Tslav a "relatively junior employee" to monitor currency-trading risks more than a year ago, the Wall Street Journal said on Wednesday. Tslav was then 25 years old and completing her master's degree in finance at Johns Hopkins University in Baltimore.
Rusnak's suspected fraud has raised concerns about financials institutions ability to control risk-taking by traders. AIB's losses have drawn comparisons with Nick Leeson who brought Britain's Barings Bank to its knees in 1995.
AIB has said it is a "well-capitalised profitable company" and would not succumb to the same fate as Barings. Eugene Ludwig, the respected banker who has been appointed to investigate AllFirst and Rusnak's activities, says he hopes to file his report by March 9.
"The investigation is proceeding vigorously," said Ludwig "My highest priority is to conduct a careful and thorough review of this situation. This includes pursuing the probability that the bank was defrauded."
Along with reporting its earnings the bank also held out some hope for a economic recovery in the second half of this year.
"The Irish economy remains fundamentally strong and competitive, there are signs of recovery in the United States, the United Kingdom has proved resilient and interest rates have reduced significantly in Poland (where it has operations)," said the bank.
Davy's Rankin said the extent of the losses and what went wrong at the banks would only be learnt once the report has been published but the "underlying trading" was much better than many rivals like Barclays and Lloyds TSB Group.
AIB's stock rose 1.5 percent to 12.15 in early Dublin trading on Wednesday. 
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