Fraud-hit bank puts bill at £483 million

ALLIED Irish Bank, which two weeks ago stunned investors with news of a huge suspected currency fraud at its US operations, today said it had finalised its losses from the debacle at £483 million.

Reporting its financial results for 2001, the Dublin-based bank said unauthorised deals by the so-called "rogue trader" John Rusnak had slashed profits for 2001 to £296m from what would have been a record £609m.

"The suspected fraud has been a substantial blow to all AIB shareholders," chief executive Michael Buckley said. "I am determined to spare no effort in repairing the damage we have suffered."

Through his attorney, Mr Rusnak has denied stealing any money and has not so far been charged with any crime. An inquiry into the matter is expected to report its findings by March 9.

Looking forward, Allied Irish Banks said the international economic outlook was uncertain but concluded there were signs of optimism, particularly for the second half of 2002.

"The Irish economy remains strong and competitive, there are signs of recovery in the United States, the United Kingdom has proved resilient and interest rates have reduced in Poland," Mr Buckley said.

Given the uncertainty for the first half of this year, the bank said it was targeting mid-single digit growth in adjusted earnings per share.

The investigation into the suspected fraud is being headed by senior US banker Eugene Ludwig. Mr Buckley said Mr Ludwig’s findings and recommendations would be made public once the bank’s board had considered them.

Mr Ludwig said today: "My highest priority is to conduct a careful and thorough review of this situation. This includes pursuing the probability that the bank was defrauded.

"I am satisfied that the investigation will allow me to establish what happened and will enable the AIB Board to take any further actions that are appropriate to protect the strength and integrity of the enterprise."

Today’s results came amid reports of another embarrassing trading loss in the US, due to the activities of a bond trader in New York, who has since left AIB.

The latest setback involved around £7m, and, unlike the first affair, did not centre around fraud allegations, but analysts said it served to compound the company’s unease.

Meanwhile, Standard Chartered, the UK bank that makes most of its profit in Asia, said full-year profit advanced 41 per cent as income from credit cards in India and Hong Kong more than made up for slower growth in mortgage lending. Net income, adjusted for a one-time gain and the cost of cutting jobs, rose to £488m from £345m a year before, the firm said.

London-based Standard Chartered has expanded into credit cards in its traditional Asian markets to reduce dependence on mortgages, which are becoming less profitable amid a price war. The company bought the Hong Kong credit card assets of Chase Manhattan Bank for £900m in 2000.