Investors in Allied Irish Banks yesterday called on its chief executive to resign over the $750m (£532m) fraud alleged to have been committed by a rogue trader operating out of the bank's US subsidiary.
Michael Buckley is under pressure to step down because of the enormity of the black hole in AIB's accounts, and the fact it took well over a year to discover John Rusnak, a trader at its Allfirst Financial subsidiary, had been covering up losses with fictitious options contracts.
One institutional investor in AIB said: "The gut feeling is, yes, Buckley should go. The incident displays a complete lack of internal control."
Said another: "Post-Barings people really are expecting companies to put in the right risk controls. AIB will have a job convincing shareholders they had done things properly."
Others were more relaxed. One smaller shareholder said: "Human error can happen in any business, but if it's found that systems were lacking, Buckley will have to go."
The company rejected the calls and pointed to the continuing recovery in its share price, which closed up €0.70 at €12. Analysts said the rise was almost entirely down to takeover speculation.
Royal Bank of Scotland, which owns Ulster Bank, and Bank of Ireland were tipped as the most likely bidders. A tie-up with RBS would be almost certain to gain approval from the Irish government, which has been keen on the idea of a united Irish economy. A merger with Bank of Ireland would be likely to involve hefty job losses.
Jon Pierce, an analyst at HSBC, said: "Almost a third of AIB's profits come from the US, which is where RBS has said it wants to make bolt-on acquisitions. It's uncanny the fit between the two."
The Financial Services Authority said it was impossible to guarantee that a similar fraud could happen to a City company. "A regulator can only do spot checks. Responsibility for preventing this sort of thing rests with company management," it said.