NatWest to punish senior staff

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The Independent Online
NatWest is today expected to outline disciplinary measures against senior staff which could result in bonus cuts, reprimands and dismissals, following the discovery of a pounds 50m hole in its interest rate options department, writes Michael Harrison.

The derivatives trader allegedly responsible for the loss, Kyriacos Papouis, left NatWest and has subsequently resigned from his new job at the US bank Bear Sterns. A senior trader, Neil Dodgeson, has been suspended by NatWest for failure to supervise pending an internal inquiry. Further disciplinary measures are expected to be outlined today following the completion of the inquiry by the accountants Coopers & Lybrand and the lawyers Linklaters & Paines.

The inquiry is thought to have discovered gaps in NatWest's risk control procedures. It is not yet clear whether any employees will be dismissed immediately. There is, however, a belief in the City that the jobs of senior managers in Nat West Markets' interest rate options department are vulnerable. It is certain that bonuses will be trimmed. NatWest pays bonuses in two tranches, one of which is deferred until later in the financial year.

The results of the investigation are being passed on to the Bank Of England and the Securities and Futures Authority.