AIB Trader Hid Losses Using Other Banks

It has now emerged that John Rusnak, the rogue trader who caused AIB to lose $691m, may have been using the banking system to hide the true extent of his losses from the bank.

It appears that Rusnak entered into options contracts with other banks during the course of the last year, which enabled him to charge upfront fees of up to £200m. These funds were used to obsure the true nature of his trading positions.

The counterparties in the transactions are believed to be Bank of America, Citibank and Deutsche Bank. There is no suggestion of wrong-doing at those institutions.

In the meantime, Rusnak himself now appears to be claiming that his boss knew that he was in difficulty. He is believed to have told FBI investigators that Pat Ryan, AIB's Head of Treasury, was fully aware of the nature of his trading activity. This claim has been denied by the bank.