Allfirst expects to start repatriating shortly the emergency $600 million (€680 million) it received from its parent bank AIB to restore confidence after the currency trading scandal in February.
"The reality is we haven't needed it and it will start migrating its way back," said Mr Maurice Crowley, Allfirst chief financial officer, yesterday. "It was taken on board because of the magnitude of what happened and when it was hard to tell how customers' deposits etcetera were going to react.
The Baltimore-based bank lost $691.2 million due to trading by currency dealer Mr John Rusnak, who has since been fired along with six other officials.
Mr Crowley said it was important to have the $600 million on hand as it sent a strong signal to the market of the bank's borrowing ability.
He said there was no specific timetable for the repatriation of the funds but it would be sent back "in the next few months".
Mr Crowley also said the impact of the reduced credit rating given to Allfirst and AIB on Monday by Standard & Poor's would likely be an increase in the cost of the bank's wholesale borrowing from a Federal Reserve bank member. However "this doesn't and won't inpact on our customers in any way", he said.
Allfirst did not have to make any such borrowings since the trading losses became known. "We've actually been a net seller of funds into the market, so we haven't tested that market at all, but it is something we will do over the next while," he said.
Allfirst has dropped to 55th place in the latest list of US commercial banks compiled by the American Banker, on the basis of total assets and issued on April 15th. Last year at this time it was 49th, and in 1999 it ranked 46th.
Mr Crowley said the latest drop could be due to the trading losses but also to other smaller banks expanding or merging.
Allfirst's long-term rating was cut from A to A- and its short-term rating from A-1 to A-2 by S&P. Rival Moody's Investors Service confirmed Allfirst's good credit rating, but reduced its financial strength rating, which measures the bank's ability to operate without the backing of the parent company.
Allfirst is pursuing retail expansion plans with the opening of five branches in northern Virginia and up to 10 more in other mid-Atlantic regions in the coming months.
