AIB denies plans to sack Allfirst's chief executive over trading fraud

Allied Irish Banks angrily defended Susan Keating, the embattled head of its subsidiary Allfirst, after reports yesterday she was about to be sacked over its huge trading fraud.

Ms Keating, 51, was the surprise survivor after the dismissal last Thursday of six Allfirst treasury executives blamed for failing to notice that the trader John Rusnak was racking up foreign currency losses of $691m (£486m). But according to reports this weekend investors in AIB, the Dublin-based parent of the American bank, were dismayed Ms Keating had been allowed to stay.

And last week Alan Rubenstein, the chairman of the National Association of Pension Funds investment council, called for her to be sacked.

However a spokesman for the Irish banking group said yesterday: "There is absolutely nothing that has changed since Thursday." In its official statement, AIB saidMs Keating would continue as the chief executive of Allfirst. AIB's chairman Lochlann Quinn later said: "It was the absolute view of the board that Ms Keating was not at fault".

Instead the bank sacked David Cronin, Allfirst's treasurer; Robert Ray, Mr Rusnak's immediate boss; and four other executives. Mr Quinn said they "went to sleep on the job".

Frank Bramble, the chairman of Allfirst, will retire in June and has not been linked to the fraud. He will be replaced by Eugene Sheehy, one of AIB's rising star senior executives, as Allfirst's executive chairman. The move has been taken as a sign Ms Keating will not be running day-to-day operations.

Ms Keating is one of the most prominent women bankers in the US, having become chief executive of Allfirst in 2000. She joined AIB's executive committee in January.

It is understood AIB will take legal advice on whether it has claims for compensation against the banks Mr Rusnak used for most of his deals.