Michael Buckley, chief executive of Allied Irish Banks PLC, was in Baltimore yesterday for his first meeting with Eugene A. Ludwig, the former U.S. comptroller of the currency who is investigating the $750 million trading loss at AIB's U.S. subsidiary, Allfirst Financial Inc., a bank spokesman said.
Buckley, who spent most of yesterday meeting with Allfirst staff, also wanted a personal update on the internal investigation, said Philip H. Hosmer, Allfirst's vice president of corporate communications.
"Mr. Buckley wanted to get the most recent information available on the investigation," Hosmer said. "He wanted to talk with Mr. Ludwig in person, and to meet with key staffers here. He's been in meetings all day. He is on top of this investigation."
The main objective of Buckley, Ludwig and the top executives of both companies is to "bring the investigation to as swift a conclusion as possible, and submit a report to the [AIB] board, so that they can take appropriate action," Hosmer said.
The board is to receive Ludwig's report on the investigation March 11, the company said yesterday.
Allfirst alleges that errant currency bets by trader John M. Rusnak ran up the $750 million in losses, which the company says he then concealed by phony transactions. Rusnak, 37, of Mount Washington, has been charged with no crime. His attorney contends Rusnak didn't lose the amount Allfirst said.
The FBI and the U.S. attorney for Maryland are also investigating the losses.
Buckley, who flew into Baltimore Thursday night, will be here for "a very short period of time," Hosmer said. While he was here in late January - he travels to the United States every few months - the Allied Irish Banks' CEO returned specifically for a firsthand update on the investigation.
Before he learned of the trading scandal Feb. 4, Buckley reportedly said his chief worry was finding a way to boost the profits of the banks' subsidiaries in Poland, which he formerly ran. But he reacted quickly and has been on top of this crisis since it broke, company executives and news reports said.
Even before he was named Allied Irish Banks' chief executive in June, Buckley, 55, was known as an energetic, hands-on manager. His varied interests, easy manner and a habit of walking around offices talking to employees when visiting AIB companies has given him a reputation of approachability, bank insiders say. He's said to be an avid sailor, a big sports fan - with rugby and Gaelic football at the top of his list - and an admirer of the fine arts.
To fix Allfirst, analysts and other industry experts say Allied Irish Banks must disclose how the breakdown in its internal controls allowed such massive losses to occur. The bank must fix those problems, then take whatever steps are necessary to restore the credibility of its Baltimore subsidiary.
Fortunately, Allfirst was strong to start with, said David Lackey, president of Weiss Ratings, a Florida firm that rates the financial strength of banks, insurance companies, brokerages, mutual funds and even individual stocks.
With banks, the ratings mirror a college grading system of "A-plus" through "F," with an "A-plus" being pristine. A bank that rates an "F" is one that's in the hands of federal regulators.
In late January - its most recent rating - Allfirst was given a solid "B," which is very good, Lackey said.
If the bank's loss is contained at $750 million, and no other major problems surface, Allfirst might well keep that "B" rating - or at worst slip to a "B-minus," he said.