AIB agrees reform plan
Allied Irish Banks PLC has reached an agreement with US, Irish and Maryland regulators to conduct reforms after a dealer at its Baltimore-based subsidiary was accused of covering up a massive five-year fraud.
Under the agreement, Allfirst Financial Inc will work to improve the bank’s oversight, risk management, internal controls, audit standards and trading procedures.
AIB accused former Allfirst currency trader John Rusnak in February of concealing $691.2m (€756.5m) in losses from 1997 to 2001.
The disclosure prompted AIB to hire Eugene Ludwig, a former US Treasury Department banking regulator, to investigate the bank.
Yesterday’s agreement refers to the findings of Ludwig’s probe, which were issued in March. The report blamed managers at Allfirst for permitting the fraud to take place.
After the report came out, AIB fired six Allfirst managers. In today’s agreement, the regulators praised AIB for changes in management and trading activities in the wake of the fraud.
Rusnak, 37, has been cooperating with US investigators and has not been charged with any crime.
AIB is Ireland’s largest company. Allfirst has about 250 branches stretching from Virginia to Pennsylvania.
