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Allfirst Reports $36.8 Million Loss

February 20, 2002

BALTIMORE, Md. (AP) _ Allfirst Financial Inc. lost $36.8 million in 2001, largely because of $691 million in trading losses blamed on a rogue foreign exchange trader, the banking company reported Wednesday.

Not including the trading losses, Allfirst said it would have earned $200.5 million in 2001, a 12.2 percent jump over the $178.6 million reported in 2000.

Allfirst’s parent Allied Irish Banks, meanwhile, reported that it earned $423 million in 2001, and would have earned $1.25 billion if the trading losses were excluded.

The Baltimore-based banking company said the losses by suspended trader John Rusnak were less than the $750 million originally reported, and date back to 1997. As a result, Allfirst, which had originally said the trading losses occurred only in 2001, said it would refile earnings reports for the past five years to show the losses.

Allied Irish Chief Executive Michael Buckley said AIB’s loss after taxes from the rogue trading would be $385 million. AIB also reported Wednesday that it had lost about $10 million because of bad trades by a bond trader at its small New York office. The bank said the losses did not involve fraud, and the trader had left the company.

``The suspected fraudulent foreign exchange trading losses unfortunately have dealt a heavy blow to what was otherwise a good improvement in our core banking performance in 2001,″ said Susan C. Keating, president and CEO of Allfirst.

Buckley and other senior AIB executives have accused Rusnak, of concealing his losses at the Baltimore-based bank using phony paperwork.

The FBI has interviewed Rusnak, but has not filed any charges pending the conclusion of an internal AIB probe. The internal investigation is being led by Eugene Ludwig, who served as the Treasury Department’s comptroller of the currency during the Clinton administration. Rusnak’s lawyers insist their client did not profit from what happened.

Ludwig has said he plans to present his conclusions to AIB chiefs by March 9.

The Wall Street Journal, meanwhile, reported Wednesday that Rusnak’s trading was monitored by a 25-year-old junior employee who was completing her master’s degree in finance at Johns Hopkins University in Baltimore. Allfirst officials did not immediately return a call for comment.

AIB operates retail banks in the Republic of Ireland, Northern Ireland, Britain, the United States and Poland. Its Allfirst operation has about 350 branches in Maryland, Delaware, Pennsylvania, Virginia and Washington, D.C.

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