BANKING: Bank of Ireland's directors have appointed Deloitte & Touche to review its risk control procedures after the $691 million (€795 million) fraud at AIB.
Mr Michael Soden, who takes over as chief executive of the bank today, said he wanted to ensure its procedures and controls were being fully adhered to.
"I have spoken to quite a number of chief executives in the last while and there isn't one of them who has not reacted in the same way," he said.
But Mr Soden said shareholders could feel "very assured" about the future of Bank of Ireland.
The bank shares the same auditors as AIB, PricewaterhouseCoopers (PwC). Mr Soden said Deloitte & Touche would not be examining PwC's role and that the audit was reviewed by the court of directors. He said Bank of Ireland had not encountered any adverse sentiment following problems at AIB and Elan last month but was mindful of the potential impact.
In an interview with The Irish Times, Mr Soden did not rule out an eventual link-up between Bank of Ireland and its nearest rival, AIB, but said there would not be much political support for this merger. Political reservations would be based largely on concerns about its impact on competition but Mr Soden suggested that, as a defensive move, it could be good for the Irish economy.
Meanwhile, yesterday's Baltimore Sun reported that Allfirst currency trader John Rusnak is co-operating with the FBI as he builds a defence against charges that he incurred losses of $691.2 million at the AIB-owned bank through making phoney trades.
He has given federal investigators his laptop hard drive and details of bank accounts and spending, and also described his trading activities and whether anyone else knew about them, the report said. Mr Rusnak has not been charged with any crime and is living at his suburban home in Baltimore.
Contacted yesterday he had no comment to make. Federal guidelines allow for lesser sentences for those who acknowledge their roles in crimes and co-operate with prosecutors.
The US attorney's office in Baltimore is reportedly considering using a fraud statute, section 1005 of the US criminal code, that carries penalties of up to 30 years in prison and a $1 million fine.
This makes it illegal to file false entries with the intent to injure or defraud. As Mr Rusnak is co-operating and is not suspected of embezzlement, the extent of the punishment could be considerably reduced.
The Federal Reserve can also impose fines and file a "cease and desist" order against any bank official who contravenes federal regulations. US Attorney Thomas M. DiBiagio declined to comment yesterday on what charges might be filed against Mr Rusnak.
