The FBI in Baltimore said yesterday it would be at least next week before there are any developments in the criminal investigation into the loss of $750 million (€854 million) at AIB's Allfirst Bank.

It has also emerged that AIB may have to pay multi-million dollar fines to the US government depending on the outcome of investigations.

Mr John Rusnak, the Allfirst currency trader whose use of fictitious contracts allegedly led to the huge loss, appears to be spending his time at home in a Baltimore suburb, while several investigations swirl around Allfirst's Baltimore headquarters.

Contacted at his residence yesterday in mid-morning Mr Rusnak said: "Sorry, no comment."

Neither the FBI or Allfirst would say if Mr Rusnak was being unco-operative, but 10 days after the discovery of phoney contracts, the FBI has evidently not yet received sufficient documentation or proof to bring charges.

"From a federal standpoint, nothing is going to happen this week," said FBI special agent Mr Peter Gulotta.

The affair is being investigated by the FBI, the US Attorney's office, the Richmond Federal Reserve Bank (on behalf of the US Federal reserve), Maryland banking supervisers, AIB officials from Dublin, and Mr Eugene Ludwig, the former federal banking regulator.

The Securities and Exchange Commission in New York would not say if it had started an independent inquiry into the bank's control system failure.

The US Federal Reserve has imposed fines of up to $200 million for serious breaches in controls and procedures at financial institutions under its supervision.

Bank of Credit and Commerce International (BCCI), which collapsed in 1991 with debts of $13 billion, incurred the highest penalty so far of $200 million and there is no cap on the amount of the fine that can be levied.

Last year US Trust Corporation and the United States Trust Company of New York, paid a $10 million fine for its "failure to establish and maintain procedures", failure to maintain correct and accurate books and records and violations of state law.

The State Bank of India paid fines totalling $7.5 million for similar offences.

A spokesman said when setting fines, the Fed considers the size of the financial institution's resources, the good faith or the lack of it to resolve problems, the severity of the violation and how often the bank has come to its attention for censure.

The US regulatory authority can also order individuals to cease working in a financial institution, the removal of directors and can tell the bank to withdraw from certain lines of business.

Officials from the Central Bank of Ireland are working with the US authorities but will be focussed on how the fraud impacts on AIB's business in Ireland.

It too can order employees to cease working within the bank and can remove a director from the board. It also has power to direct the bank to curtail its expansion and operations in certain areas.

The State Senate Finance Committee called Mr George Cormeny, senior vice president at Allfirst, and Mr Mary Louise Preis, Maryland's commissioner of financial regulation, before it on Tuesday to discuss the fraud.

Mr Cormeny told the committee there were no solvency issues for the bank but could not comment on the investigation.

Ms Preis was asked whether Allfirst's switch three years ago from a bank with a federal charter to one with a state charter, which gives her agency primary responsibiliy for its regulation was a factor in the failure to detect the fraud.

She assured the committee that the switch in regulation had "little practical effect" as state examiners conduct yearly audits using standards roughly identical to those of federal regulators. The bank is also regulated by the Federal Reserve.

Meanwhile, the long-term future of the Allfirst subsidiary within the AIB group was further questioned yesterday as the international ratings agency, Moody's, downgraded its financial stability rating.

"The credibility of Allfirst has now received a serious blow and we will continue to review carefully AIB's strategy for its US business over the coming weeks and months," it said.

"The US franchise can be expected to be more materially damaged by this event.

"Moody's will review carefully AIB's strategic plans for the US and will monitor the extent to which this event could overwhelm management and have implications for the business of the whole group."

It notes that even before the fraud, AIB faced strategic issues with regard to its US operations given its relatively small presence in a consolidating US market.

It has also achieved lower returns for the bank than other part of the group.

Moody's believes the key drivers that are influencing AIB Group's ratings, such as its retail and commercial banking franchises in the Republic, will not suffer as a result of the $750 million fraud.