Evidence showing that senior executives at Allied Irish Banks and its US subsidiary Allfirst knew about the unusual dealings by rogue trader John Rusnak is expected to emerge this week.
It is understood that Eugene Ludwig, the senior US banker hired by AIB to probe the scandal which cost it $691m (£487m), has found evidence that Mr Rusnak's bosses had been aware for some time he was exceeding his $2.5m a day trading limit.
Crucially, Mr Ludwig is believed to have correspondence sent by Bank of America (BofA) to AIB about a $200m loan that Mr Rusnak arranged last year to cover his trading position. The loan was with four banks – BofA, Deutsche, Bank of New York and Citibank. In his negotiations, Mr Rusnak threatened to withdraw AIB's business if they did not agree to the loan. BofA executives say they contacted AIB about this and it was brought to the attention of Pat Ryan, the head of treasury. He denies this.
AIB says it has no record of any banks raising concerns about Mr Rusnak's dealings. However, it is believed BofA has passed tapes and records of a conference call to Mr Ludwig, as well as to the FBI, which is looking into the scandal. Mr Ludwig will present his report to AIB's board on Tuesday and an abbreviated version is expected to be published later that day. Keen interest will be taken in what is disclosed and what isn't.
Lawyers for Mr Rusnak, who has not co-operated with Mr Ludwig for legal reasons, have made a number of claims about whether AIB and Allfirst executives were aware of what he was up to. They told investigators his bosses at Allfirst, Robert Ray and David Cronin, may say they were not aware of Mr Rusnak's trading but "they could have figured it out if they wanted to".
Michael Buckley, AIB's chief executive, took the unusual step of contacting several papers last week to deny a story that he intervened over one of Mr Rusnak's deals last year. He will face pressure from another quarter after Michael Soden, chief executive of Bank of Ireland, AIB's main rival, revealed his interest in a merger of the two banks.
Though Mr Soden stressed he had not spoken to Mr Buckley, the AIB boss faces calls to talk to his rival about creating a national banking champion. However, any deal would be unlikely to be approved by the EU. Analysts think a bid for AIB by either Barclays or Royal Bank of Scotland is more likely.Reuse content