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Former NatWest trader 'on leave'

The interest-rate options trader at the centre of the pounds 50m hole in NatWest Market's options trading book was not at his desk at Bear Stearns, his new employer, yesterday.

A spokeswoman for the US securities firm refused to say if Kyriacos Papouis had been suspended as a result of the embarrassing problems at NatWest which surfaced late last week.

"I can confirm that he works at Bear Stearns although he is currently on leave pending further information," a spokeswoman said from Bear Stearn's offices in New York. Mr Papouis left NatWest last December to join Bear Stearns.

NatWest has refused to confirm he is the trader involved. Nor has the bank revealed the identity of a senior trader who has been suspended for "failure to supervise" the operation, although he is widely believed to be Neil Dodgson.

A spokesman for Mr Dodgson said he could not comment on the case but would co-operate fully with any investigations.

The pounds 50m hole, which was revealed after the markets had closed on Friday, sent the bank's shares plunging as low as 713.5p at one point yesterday. The shares recovered some of those losses to end at 731.5p, off 27p.

NatWest Markets continued its internal investigation into the affair, which surfaced just days after the investment banking operation of NatWest reported a rise in pre-tax profits of more than 50 per cent.

The bank has hired external auditors to help with the investigation which could take several weeks, according to a NatWest spokeswoman.

The Securities and Futures Authority, the City regulator, and the Bank of England have been informed of the problems which surround the mispricing errors in its interest-rate options book.