US bank fires trader linked to NatWest loss

Kyriacos Papouis, the trader linked to NatWest Markets' pounds 50m options loss, last night resigned from Bear Stearns, the US investment bank.

"We have accepted the resignation of Kyriacos Papouis, an interest rate trader in our derivatives department." a Bear Stearns spokeswoman said.

"We have conducted a thorough review of his open trading positions and are satisfied that they are all booked and valued properly. We have notified the Securities and Futures Authority of his resignation," she said. She declined to give any further details.

Earlier this week, Bear Stearns said Mr Papouis was "on leave, pending further information." Mr Papouis could not be contacted for comment yesterday.

Mr Papouis left NatWest Markets, the investment banking arm of National Westminster Bank, late last year and moved to Bear Stearns.

Last week NatWest disclosed mispricing errors in its interest rate options book and said it had suspended a senior trader, named by banking sources as Neil Dodgson, for alleged "failure to supervise". It also reported a former options trader, allegedly Mr Papouis, to the SFA.

Options are contracts which give buyers the right, but not the obligation, to buy or sell an underlying security at a set price on a set date in the future.

The SFA said it had been notified of the NatWest probe into the loss and had opened a file. The Bank of England said it was co-operating with the SFA.

The episode was especially embarrassing to NatWest, coming only days after it announced buoyant results for 1996.

On Thursday, a senior NatWest Markets official was reported to have said that, compared with the size of losses run up from derivatives trading at some other banks, it had got off relatively lightly.

Banking sources attending a charitable function on Thursday night claimed that Nick Riley, administrative officer for NatWest Markets' global foreign exchange business, said: "If that is all it costs us to learn the value of a tight infrastructure, then it could turn out to be a blessing in disguise."

But a NatWest spokeswoman said his comments were not attributable to the company. "This was a personal view," she said.