AIB last night confirmed that one of its bond traders had run up losses of $6 million after US authorities announced they were no longer issuing "long-dated" bonds.
A $10 million (€11.42 million) hole in another of AIB Group's US operations will be reflected in figures announced today, alongside the loss arising from the fraud at its Allfirst subsidiary.
The news pushed up the price of existing bonds at a time when the bank had been betting against them.
The trader admitted losses of $700,000 on his $500 million bond portfolio, triggering an investigation by managers unhappy with the veracity of the figures. This showed the true scale of the losses being in the region of $6 million. By the time the bank sold off the portfolio, the losses mounted, eventually reaching $10 million.
The trader was suspended and has subsequently left the bank. AIB last night stressed that there were no other investigations ongoing into similar matters at any of its operations. The group said there was no evidence of rogue trading in the latest case.
The latest news comes just weeks after it emerged that foreign exchange trader Mr John Rusnak ran up losses of $750 million betting the yen against the dollar over a period of 12 months.
AIB said the investigation into the mis-stated bond loss showed its internal controls did work in this instance, raising further questions about how the problems took so long to surface at Allfirst.
