Despite modest limits imposed by AIB on his currency dealing, Allfirst currency trader, Mr John Rusnak, was making such big trades in the last year that he was moving markets worldwide, according to sources close to the investigation of losses at the AIB-owned bank.
In one night alone in May or June of 2001, Mr Rusnak made a massive trade of $1.5 billion (€1.7 billion) with Citibank in Singapore, the sources said. His notional limits for a single trade were in the region of $2-3 million. Mr Rusnak is believed to have been trading mainly in dollar-yen currencies.
The extent of Mr Rusnak's trading was such that he was approached by a senior official at Allfirst, Mr David Cronin, and asked what was going on, after Mr Cronin received an agitated query from AIB chief executive Mr Michael Buckley in Dublin in mid-summer of 2001, the sources said. Mr Rusnak was apparently told that Mr Buckley was inquiring about a report he had received that Mr Rusnak had become the biggest single currency dealer in the United States.
Mr Rusnak's trading was under the supervision of Mr Cronin, head of the treasury operation at Allfirst, who is under suspension without pay during the investigation.
AIB in Dublin appears to have been reassured about the extent of the trading. Investigators are now looking closely at the gross and net figures relating to these trades to see if they reflected the true extent of Mr Rusnak's activities.
Allfirst's treasury department was meant to be a modest operation and was recording profits of less than $10 million a year.
This focus of the investigation raises questions about when Allfirst officials - and AIB - knew that something serious was going on at the Baltimore-based bank. Allfirst chief executive Ms Susan Keating and AIB chief executive in the US Mr Frank Bramble said they did not know of rogue trades until the losses were exposed early in February.
A spokesman for Allfirst said last night he could not comment until the completion of an independent investigation into the affair by Mr Eugene Ludwig, a former comptroller of the US currency, on March 9th.
Mr Ludwig is investigating the loss of $691.2 million incurred by Mr Rusnak at the bank during the last five years.
The US Federal Reserve, Maryland bank regulators and the FBI are also investigating alleged fraudulent trading by Mr Rusnak.
Citibank in Singapore said last night no one would be available to comment until Monday.
The trade with Citibank is believed to have been a hedge and the bank did not stand to lose the $1.5 billion, but it was so massive that it caused talk in banking circles in the US and Asia. Documents have been subpoened from Citibank and Bank of America which were the prime banks for Mr Rusnak's trading.
