Sources close to AIB management insisted yesterday they had no records of a meeting with a major American bank over a disputed trade negotiated by the US bank with trader Mr John Rusnak in Allfirst Bank in Maryland.

The AIB group head of Treasury Mr Pat Ryan knew nothing about it, the sources said. The US bank concerned has, however, investigated the trade and has established beyond question that the dispute over a year ago was escalated to AIB parent company level, thus alerting AIB to the unusual activities of Mr Rusnak.

The inability of AIB to find any record of a meeting may be because it could have been held by conference call, banking sources in New York said. The bank had not been contacted by AIB yesterday regarding reports of the encounter. One of the persons to partake in the encounter between the American bank and AIB was the Dublin-based client manager from the US bank, The Irish Times has learned.

The outcome of the meeting was that a "deep-in-the-money" trade, which Mr Rusnak was unhappy about, went through to the satisfaction of the American bank at a cost to Allfirst of many millions of dollars. Mr Rusnak had threatened to take his business away from the US bank after his reasons for making the trade - essentially a massive cash loan which might have to be repaid with huge interest if Mr Rusnak's currency bets did not come off - were questioned by the bank, sources said. It is believed the trader was betting heavily on the yen rising against the US dollar, which did not happen.

Executives at Allfirst Bank headquarters in Baltimore are bracing for a major shakeup at the top after the independent report on its massive currency trading losses is completed on Saturday and presented to AIB's chairman, Mr Lochlann Quinn, in Dublin. The report, by former US Treasury official Mr Eugene Ludwig, will outline how the system of control in Allfirst and AIB failed so spectacularly to prevent Mr Rusnak running up losses of $691.2 million and hide them through counterfeit trades.

One of the most intriguing aspects is whether Mr Rusnak's version of events is available to Mr Ludwig. The trader has not been in direct contact with the bank's investigation. He is, however, co-operating with the FBI. His testimony includes allegations damaging to AIB, according to sources close to the investigation. AIB has strongly denied specific allegations that have leaked and executives said privately that Mr Rusnak was trying to target specific individuals to bring them down with him.

The investigation focuses on an estimated 14 fraudulent trades made by Mr Rusnak to cover massive losses. It also is looking at four "deep-in-the-money" options reportedly sold by Mr Rusnak to Bank of America, Citibank, Deutsche Bank and Bank of New York in early 2001 after Mr Rusnak had lost $211 million the previous year.