In the aftermath of the shocking $750 million currency trading loss, the jobs of three top executives at the American unit of Allied Irish Banks PLC in Baltimore are in jeopardy, industry experts said yesterday.
On the hot seat are Frank P. Bramble, Allfirst Financial Inc.'s chairman and the chief executive of Allied Irish Bank's USA operations; Susan C. Keating, Allfirst's president and chief executive; and Maurice Crowley, the company's chief financial officer.
Whether any or all three of the executives are fired, the experts said, likely hinges on the outcome of the multiple investigations into the huge trading losses.
The loss has been a serious and embarrassing blow to Allied Irish, the bank's parent based in Dublin, Ireland.
Allfirst executives have blamed currency trader John M. Rusnak, 37, of Mount Washington for the debacle. They accuse him of taking large risks that the Japanese yen would rise in value, but when they fell, he hid the mounting losses.
Bank officials had been questioning Rusnak about his trading, but when he didn't report to work Monday, they contacted the FBI. Two days later Allfirst went public with the scandal.
The bank's loss has sent shock waves from Baltimore to Dublin.
"This is a heavy blow," said Michael Buckley, Allied Irish's chief executive, according to The Financial Times. "I am determined to make back or make good the damage this has caused. Obviously, in a general sense it has damaged our credibility."
Analysts and industry experts agree that the breakdown is severe enough to jeopardize even the jobs of the top executives running the U.S. operations.
"Losing credibility translates into losing a job," said Jonathan Gollins, a banking analyst at Banc of America Securities in London. "Ultimately, I'd say their [Bramble, Keating and Crowley's] jobs are on the line. Definitely, it does depend on the outcome of the investigation."
A London-based analyst who requested anonymity agreed, saying, "The heads at Allfirst are going to have to roll. One or more may have to carry the can for this."
A Dublin-based analyst, who also requested anonymity, said, "If you were a gambling man, what would you think? That is a one-way bet. Things will change clearly, and so they should."
Bert Ely, a banking consultant in Alexandria, Va., said the company may ultimately need scapegoats, and the three executives are top candidates.
"A lot of finger-pointing goes on internally," he said. "I have got a feeling heads will roll, particularly when the top people have been embarrassed. And this has been embarrassing."
Ely said that typically the chief financial officer has responsibility for risk management in a bank.
"They need to be looking at him [Crowley]," Ely said. "It seems to me Keating would be likely to go. Maybe they both [Keating and Bramble] go."
At a news conference Wednesday, Allfirst executives said they had immediately suspended five employees: the company's treasurer, senior vice president for treasury funds management, senior vice president for investment operations and two staff members, including Rusnak.
The three executives and the other staff member will remain suspended until the company's investigation is concluded, which could take a month.
The sudden turn of events has put Bramble and Keating, two highly regarded executives, in a difficult position, analysts said.
Bramble, 53, is a member of Allied Irish's board of directors, and made $1.2 million in salary and bonus in 2000. Keating, 51, was named to the parent's top executive committee last month, and made $936,000 in 2000, according to the company's most recent proxy statement.
Bramble joined Allfirst, then known as First Maryland Bancorp, in April 1994, as chief executive, after helping rescue troubled, Baltimore-based MNC Financial Inc.
In 1993, MNC was acquired by NationsBank Corp., now known as Bank of America Corp.
Keating is one of the highest-ranking female bankers in Maryland. The former English teacher joined MNC Financial in 1988 and rose quickly.
After NationsBank acquired MNC, Keating was named president of NationsBank Maryland. But in August 1995, she left abruptly after clashing with R. Eugene Taylor, president of NationsBank's mid-Atlantic banking group, over "differences in management philosophy."
She was hired by Bramble in 1996 as an executive vice president at Allfirst. Four years later, she was named chief executive.
Crowley joined Allfirst in April last year as chief financial officer and assumed responsibility for all financial areas, including taxes, planning and cost management.
He was head of group investor relations at Allied Irish in Dublin and joined the company in 1986.
Gary Kennedy, Allied Irish's group financial director, declined to say whether any of the top executives would be fired because the formal internal investigation has barely begun. He did not rule out such action. "Obviously, we are doing some soul-searching about ourselves," he said, "but we have a great retail operation there. It's a great market."
Kennedy said that employees in Ireland have been "pretty frantic."
They have asked him, "'How could you not know about this? Is your head on the block? Is the bank going to fall?'" he said.
George Freibert, a former bank examiner and chairman of Professional Bank Services Inc., a bank consulting and investigative firm in Louisville, believes that Allfirst's top executives should not be blamed if proper controls were in place and they were violated.
"This is not an Enron-type thing," Freibert said, referring to the collapse of the Houston energy company. "In that regard, if the company had reasonable internal controls and proper audits, that is about all you can ask. I would have a very difficult time if you would put this at the feet of senior management."
But other analysts say top management is on the hook and has the ultimate responsibility.
"If you have a failure of systems in an institution in terms of line management, ultimately the chief executive is responsible in terms of the lines of control and reporting," said Gollins, the bank analyst.
But if the loss is a result of fraud, then the Allfirst executives might keep their jobs, Gollins said.
"It would really depend on the outcome of that investigation," he said. "At this stage, it is difficult to say one way or the other."
Sun staff writer Andrew Ratner contributed to this article.