John Rusnak lost $691M as a currency trader — hiding it cost AIB its US subsidiary

John Rusnak was a currency trader at Allfirst, the US subsidiary of Allied Irish Banks (AIB), one of Ireland's largest financial institutions. Between 2001 and early 2002, Rusnak made a series of bad foreign exchange bets that accumulated losses of approximately $691 million. To conceal the losses, he entered fraudulent option trades into the bank's systems, creating the appearance of profitable positions while the real losses mounted.

The fraud was uncovered in February 2002 during an internal investigation triggered by a margin call that Rusnak could not explain. The revelation was described as Ireland's biggest banking scandal and at the time the fourth-largest banking scandal in the world. AIB's share price fell sharply, and the bank's reputation was severely damaged. Rusnak pleaded guilty to bank fraud in October 2002 and was sentenced to 7.5 years in federal prison. He was ordered to repay the full $691 million, though the amount depended on his future earnings.

The scandal forced AIB to restructure its US operations. In April 2003, AIB merged Allfirst with M&T Bank Corporation, effectively ceding control of its American business. AIB later sold its 22.5% stake in M&T Bank for $2.1 billion in 2010 as part of its recapitalisation during the Irish financial crisis. The Rusnak case became a textbook example of how a single rogue trader, combined with weak internal controls, could bring down a bank's entire overseas strategy.