DUBLIN, Ireland - In a major housecleaning after an embarrassing currency trading scandal, two top officers of Allfirst Financial Inc. and several other employees will be replaced, its parent company, Allied Irish Banks, said this morning.
Allfirst Chairman Frank P. Bramble and Treasurer David M. Cronin are the biggest casualties of the monthlong investigation into the rogue trading by John M. Rusnak that cost the Baltimore-based bank and Allied Irish $691.2 million.
The bank said the Baltimore trader acted alone without outside collusion.
Chief Executive Officers Michael Buckley of Allied Irish and Susan C. Keating of Allfirst will retain their jobs, Allied said.
Allied Irish's board has appointed Eugene Sheehy, an Allied executive, as chief executive officer of Allied's U.S. division and executive chairman-designate of Allfirst, whose market includes Pennsylvania, Delaware and Northern Virginia.
Allied Irish announced that Bramble will retire effective June 1.
That is the immediate fallout from the report released in Dublin this morning by Eugene A. Ludwig. Allied hired Ludwig, former comptroller of the U.S. Currency, to investigate how Rusnak ran up huge losses in currency trading undetected.
Ludwig's report suggests that currency trading oversight should be transferred to the main headquarters in Dublin.
Rusnak, who has been fired, did not cooperate with Ludwig's investigation, but he has been in contact with the FBI since Allfirst discovered the huge losses involving his currency trades.
According to Ludwig's report, Rusnak allegedly produced false Bank of America slips to cover some of his trades. He also is alleged to have changed currency values as they were fed through his computer on the Reuters service before bank employees, whose job was to verify numbers, got a chance to see them. They apparently did not have the wire service available to them that Rusnak did, sources said.
Bramble and Keating quickly slipped out of Dublin yesterday afternoon to return to Baltimore, 16 hours before Allied released details of the Ludwig investigation to the Irish stock market at 7 a.m. (2 a.m. EST).
Buckley, Ludwig and Allied Chairman Lochlann Quinn are to present the report at a news conference at 11 a.m. at Allied's headquarters, Bankcentre.
Cronin, executive vice president and treasurer, was widely believed to be vulnerable because he replied to Buckley by phone and e-mail in May that trading levels were not too high. Cronin began requesting profit-and-loss statements of the trading operation a month later - the beginning of the end for the alleged scheme that stretched back to 1997.
In addition to Cronin, three other Allfirst employees who were suspended with pay after the discovery of the trading losses lost their jobs.
They are: Robert F. Ray, senior vice president of treasury funds management and Rusnak's immediate supervisor; Jan N. Palmer, senior vice president of investment operations; and Larry Smith, a clerk in the bank's operations unit.
Also fired were Michael Husich, head of internal audit at Allfirst, and Lou Slifker, also with Allfirst internal audit.
Bramble, 53, joined Allfirst, then known as First Maryland Bancorp, in April 1994 as chief executive.
He is a member of Allied Irish's board of directors and was named chairman of Allfirst's board in 1999. He made $1.2 million in salary and bonuses in 2000.
He began his banking career in 1967 with First National Bank of Maryland, but jumped to competitor Maryland National Bank and worked as assistant controller, deputy controller and vice president of strategic planning.
In 1978, Bramble became a bank consultant, but five years later returned to Maryland National Bank as vice president of its International Division and became chief operating officer of the parent company, MNC Financial.
After MNC ran into trouble, Bramble became president and chief executive and is credited with helping rescue the company, which was acquired in 1993 by NationsBank Corp., now known as Bank of America Corp.
Bramble relinquished the role of Allfirst CEO to Keating in 1999 as his responsibilities expanded with Allied Irish.
Cronin's inaccurate assurances to Buckley in May that currency trading levels were not out of line were interpreted in Ireland as very damaging. "The buck stops there," said one recent headline in Ireland, referring to Baltimore.
Allied and Allfirst have only begun repairing the damage from what has been described as the largest currency trading debacle since Britain's Barings PLC was toppled by $1.3 billion in losses piled up by trader Nicholas W. Leeson.
Allied hasn't been nearly so weakened, although the losses have dissolved half its profit for last year. But the matter has created the impression in Ireland that it is likely to be bought by a larger outside bank, such as the Royal Bank of Scotland; to merge with another Irish bank; or to sell Allfirst and abandon its U.S. strategy.