NatWest suspends trader over $80 million bookkeeping error
LONDON (AP) _ NatWest Markets said Friday its earnings would be reduced by $80 million because of errors in its books and announced it had suspended a senior trader in the incident.
NatWest did not immediately identify the employee but said the trader had been suspended for ``failure to supervise″ in a case where it found ``mispricing errors″ in records for interest-rate option trades. Investors use such trades to bet on future interest rate movements or to offset the risks to their businesses of interest rate fluctuations.
NatWest Markets would not say what the errors were or how those errors cost it money.
NatWest Markets _ a financial trading unit of NatWest Group PLC, one of Britain’s biggest banking companies _ said it was conducting an internal investigation and keeping the Bank of England fully informed. The trader has been suspended at least until the probe is complete, NatWest said.
No clients were affected by the problems, NatWest said. It said the irregularities were discovered as executives reviewed prices listed in its books.
Saturday editions of newspapers named the trader as Nigel Dodgson, a 33-year-old manager of European currency trading. The Daily Telegraph said he is not suspected of deliberate wrongdoing.
NatWest also said it had turned over information on a trader who already had left the company to officials at the Securities and Futures Authority, which regulates some markets in London.
That trader also was not immediately identified by the company, but newspapers named him as Kyriacous Papious, who joined Bear, Stearns & Co. earlier this year.
The errors came to light after the departure of Papious, who had worked on the interest rate options book, according to The Daily Telegraph.
NatWest declined to comment beyond a brief statement that it issued after the London Stock Exchange had closed for the week.
The Bank of England also declined comment.
The British Broadcasting Corp. said the Securities and Futures Authority was considering a formal investigation
The writedown against earnings will be taken in the first half of this year and would be equivalent to about 4.5 percent of last year’s annual profit at NatWest Group. On Tuesday, NatWest Group reported its earnings for 1996 fell 36 percent to 1.12 billion British pounds, or $1.84 billion.