As Allfirst executives in Baltimore work round the clock to complete their investigation into the loss of $750 million (€864 million), a fuller picture has emerged of the lone currency dealer at the centre of the scandal and how his rogue trades were uncovered.

John Rusnak was one of only two foreign currency traders at Allfirst. He made proprietary trades - i.e. he bought and sold currencies to make a profit for the bank - while his colleague conducted transactions for bank clients. It was a small treasury-debt operation, accounting for less than 3 per cent of AIB profits.

Working from a beige-coloured cubicle on the 12th floor of Allfirst's city-centre tower, with a number of monitors constantly tuned to Bloomberg and Reuters financial news, Mr Rusnak would bet millions every day on the currency markets. Usually dressed in trader business-casual style of button-down shirt and khaki trousers, he would typically work in his cubicle from around 7 a.m. to late afternoon, doing up to 100 trades a day or more.

He had a reputation for being very quick and hard-working, and was "a bit cocky", as one acquaintance put it, "but a regular guy to go to a football game with or have a pint". Once in 1997 he boasted that he made a $5,000 profit selling US dollars for German deutschemarks in a transaction that took only seconds. "If we could do that every time, we would be sitting back in our bathrobes smoking a pipe," he said at the time.

Mr Rusnak, 37, is a native of Pennsylvania, where his father Emil was a steel worker and his mother Angelina registers death certificates for the state. He was employed first as a currency trader at Chemical Bank, a predecessor of JP Morgan Chase in New York, where he is remembered by a former colleague as "a nice guy, good at what he did".

He left New York, reportedly because he didn't like the pressure, and in 1993 joined the AIB-owned bank in Baltimore, then known as First Maryland. Within a few months he and his wife Linda moved into a 119-year-old Victorian frame and clapboard house in the Baltimore neighbourhood of Mount Washington, which they bought for $217,500, taking out a $135,000 mortgage from Harbour Federal Savings.

They have since earned a reputation as modest people in the fashionable neighbourhood. "They certainly aren't flashy - they didn't have any expensive or extravagant things, or live any kind of expensive lifestyle," an acquaintance, Carol Brody, was reported as saying.

Mr Rusnak became an active parishioner at the Shrine of the Sacred Heart Catholic Church where his two children attended school, and he joined the board of Baltimore Clayworks, a non-profit ceramics and cultural centre. The family held a lecture by an artist in their house not long ago.

"Upstanding" is a word used to describe Mr Rusnak by both a neighbour, Eva Glasgow, and by his boss, Allfirst president and chief executive Susan Keating. "He was lovely, nice, fun, pleasant, I would never have thought he would be the kind of guy to do this," Margery Pozefsky, also on Clayworks board, told a Baltimore Sun reporter.

One thing that acquaintances noticed was that he was often preoccupied with his work, and recently seemed more and more stressed out, although at the bank he still gave an appearance of confidence and being in control. But two weeks ago he began requesting unusually large amounts of money for his trades and the first seeds of suspicion were sown in the mind of one member of the Treasuries section responsible for verifying trades in currencies, equities and other bank business. This unit works from a different floor from the traders to maintain a separate oversight.

This bank official became concerned that Mr Rusnak was resisting oversight and complaining that with the limits imposed he could not trade effectively. On Friday he questioned Mr Rusnak about some of the contracts, many with expiry limits of 364 days taken out during 2001. He began trying to confirm the contracts actually existed.

It is now believed that last year and in recent weeks Mr Rusnak made many bets on the yen using complex financial instruments known as derivatives that are traded like stocks and bonds, almost certainly gambling that the Japanese currency would rise against the US dollar. He made bets on other currencies too. The greenback surged ahead throughout the year, defying predictions.

The losses for the bank should not have been serious. Traders buy options that enable them to exit losing positions at a price below the current market value. Without these offsetting options the bank would be left "naked". But everything seemed to be under control, with Mr Rusnak always working within the modest limits of the bank's risk-management plan.

"Most foreign exchange or currency markets are very loosely regulated at best," said Alan Revercomb, options strategist at Ideaglobal. "It's primarily internally controlled."

The bank actually makes money from the illegal strategy if the original bet comes off, because no options were bought. But if the currency goes the other way, failure to purchase the option, as happened here, exposes the bank to huge unhedged losses. Each time he miscalculated, Mr Rusnak apparently lost on average an estimated $10 million through not having a valid hedging option.

Mr Rusnak finished work as normal on Friday and went home. On Sunday afternoon, as the Asian markets were opening, the treasury official drove into the bank's office at 27 South Charles Street and began to check out the options Mr Rusnak had declared. They had been taken out with the biggest and most respectable banks in the Asian-Pacific region, where the Bank of Tokyo and Hong Kong Shanghai Bank are the top currency traders.

It was then the awful truth began to become evident. One after another, the Asian banks told Allfirst that they knew nothing of the options contracts that Mr Rusnak had entered. The treasury official worked through the night tracking down more and more phoney transactions. Mr Rusnak was by then fully aware that the game was up. The official had called his house on Sunday afternoon to ask him more questions about the trades. On Monday morning he didn't turn up for work and refused to come to the telephone.

It took some time for the Asian banks to check out and verify that contracts simply didn't exist and for the Allfirst officials to "back out" the fictitious trades and then rerun the value-at-risk models. At 3.30 p.m. on Monday the official notified Ms Keating and Frank Bramble, the AIB chief executive in the US, of an "emergency situation".

Other top executives out on business were summoned back to South Charles Street. Within 30 minutes, they had telephoned the news to group chief executive Michael Buckley in the Republic, where it was already getting late in the evening.

As the bank officials worked throughout Monday night revaluing all the last year's positions, the group treasurer, Pat Ryan, prepared to fly to Baltimore. By the time he arrived on Tuesday afternoon Allfirst, the star performer of AIB, was looking at a total loss of $750 million in up to 100 transactions dating from early 2001. It was the banking world's biggest scandal since Nick Leeson brought down Barings Bank with $1.4 billion in losses in 1995. The FBI had already been called in.

All the top officials expressed shock. "We couldn't get our head around the fact that it was so big," said one.

One theory being checked is that Mr Rusnak was able to rely on one or more treasury officials not to verify certain trades. An accomplice might have allowed him to post fictitious options trades and leave positions in the spot forex market unhedged. Another is that there was external collusion. Pending the outcome of investigations, the vice-president/treasury, the senior vice-presidents in charge of treasury funds and investment operations, and one staff member have been suspended.

"All are on full pay and are co-operating with the bank and other agencies," said an Allfirst official. "At this stage we don't think there is any money salted away."