AIB may yet face sanctions from the US regulator, the Securities and Exchange Commission, while some US investors are threatening legal action. Meanwhile, the FBI investigation continues and it remains to be seen what charges, if any, Mr Rusnak will face. The first chapter of this affair is over, but the full implications have yet to unfold.
Just five weeks after the discovery of massive trading losses at its US subsidiary, the AIB board and management have discovered much about what happened and have responded. The report into the affair by Mr Eugene Ludwig outlines the extraordinary deviousness with which Mr John Rusnak, the trader at the centre of the affair, covered up ever-mounting losses and points clearly to the gravely incompetent Allfirst management which let it happen.
Few would argue with the measures announced by the AIB board. Clearly those directly responsible had to go and the changes in structures and control systems seem appropriate. However, it remains to be seen whether the financial markets will be satisfied that the bank has done enough, with many London investors focussing on its decision not to dismiss any of its more senior executives. If the market turns against AIB, then the affair could yet have significant implications for the future of the bank.
The Ludwig report has answered many questions. But many more remain. Because it was completed so quickly, the report is necessarily incomplete. According to its authors, "it is likely that further inquiry will uncover additional material information."
Some things are already abundantly clear. Mr Rusnak used considerable guile in pursuing his fraud, plotting a path through the outdated and inappropriate control system at Allfirst. That one trader in a small dealing room in Baltimore could incur losses of $691 million ( €789 million) shows the massive financial exposure which can result from trading complex financial instruments. Previous crises should have led management at every bank to be alert to this risk. Clearly AIB and Allfirst management were not.
The Ludwig report is clear that the main blame rests with Allfirst management in the US, particularly with Mr Rusnak's immediate supervisors. They did not understand what he was doing and didn't bother to find out. They missed successive signals which should have raised the alarm.
Mr Ludwig finds no evidence that anyone at AIB headquarters knew what was going on. However the bosses in Dublin cannot escape all the blame. Proper control and risk assessment systems would have detected the fraud much earlier. The degree of autonomy given to the US bank was highly questionable. Market information to AIB in Dublin relating to foreign exchange dealing at Allfirst did not spark further investigation
Much work remains to be done to establish the full story. Mr Ludwig's team did not talk in detail to the big banks which had huge dealings with Mr Rusnak. Did these banks not realise something was strange about Mr Rusnak's trading patterns and, if they did , what did they do about it ? And we have still to hear Mr Rusnak's own story.