AIB group chief executive, Mr Michael Buckley, will hold his first face-to-face meeting with US banker, Mr Eugene Ludwig, today in Baltimore. Mr Ludwig is leading the bank's investigation into the $750 million (€858 million) fraud at Allfirst and is due to present a report to AIB's board of directors next month.
Mr Buckley and group head of finance, Mr Gary Kennedy, travelled to Baltimore yesterday and will meet staff at its US subsidiary, which is also being investigated by the US Federal Reserve, the FBI and the Central Bank of Ireland.
Allfirst is estimated to have lost up to $65 million in deposits to rivals in the past week. Mr Todd Deavenport, a banking analysts at SNL Financial in Charlottesville, Virginia, said that, while there was no reason for any concern, it was not surprising that some customers would take their money elsewhere.
"There's really no reason for any concern, but there's a perception that, if these people can lose $750 million, do I really want to trust them with my money?" he said.
Mr Buckley is understood to be in the US to talk to staff and listen to their concerns following the massive fraud, which has affected its business locally. Mr Buckley and Mr Kennedy, who are both directors of Allfirst, are not expected to be interviewed by any of the officials involved in the investigation and will travel back to the Republic at the weekend.
In Baltimore, banks such as Wachovia, Mercantile Bankshares, and First Mariner Bancorp, as well as some of the area's small community banks, have all reported a jump in deposits following revelations about the fraud.
"We have seen a lot of deposit flow. Our deposits are up, month over month, and year over year. Do I believe some of it is coming from Allfirst? Absolutely." Wachovia regional president in Baltimore, Mr William Knott, told the Baltimore Sun newspaper.
Bankers locally estimate that deposits worth between $35 million and $65 million have switched onto their books from Allfirst.
A Baltimore money manager said several of his clients, who were commercial customers of Allfirst, had transferred between $2 million and $3 million out of that bank due to a lack of confidence in its management.
Based on local estimates, the amount of deposits lost by Allfirst is relatively modest in terms of its total deposit base. At the end of September 2001, Allfirst reported total deposits worth $12 billion.
In the past week officials from Allfirst have been contacting customers to assure them their funds are safe. The loss of business is a further setback for Allfirst and its chief executive, Ms Susan Keating, who had reported good progress in winning business from competitors in the Baltimore area before the fraud was revealed.
Ms Keating earned substantial bonuses in the two years since taking over as chief executive in 1999 based on performance targets set by the bank. In 2000, Ms Keating received a total remuneration package of $936,000 including a salary of $600,000 plus a bonus of $336,000. In the previous year her salary was $450,000 and she was paid a bonus of $300,000.
Bonuses to executives across AIB Group have been frozen pending the outcome of Mr Ludwig's investigation.
Meanwhile AIB's Bank in Poland, BZ WBK, has reported a 13 per cent increase in profits to 151 million zlotys (€41.5 million) in 2001. BZ WBK, which is Poland's fifth biggest bank, also reported a drop in provisions for bad debts.
Its results will be included in AIB Group's profits to be announced next week. The bank is expected to announce that the fraud will wipe €596 million of its 2001 after tax profits bringing the full year outturn to down from €997 million to €401 million.
