AIB's US subsidiary, Allfirst Financial, is tonight at the centre of an international fraud investigation involving about $750m (€860m). Suspicions intensified after foreign currency dealer, John Rusnak, disappeared at the weekend.

John Rusnak, of Allfirst's Baltimore Headquarters, disappeared last weekend as the investigation began to close in on him. Mr Rusnak is described as "Mr Middle America": an American in his 40s who has been with Allfirst Financial for seven years. He is believed to have defrauded the bank of $750m by generating factitious foreign exchange transactions.

The bank believes this had been going on for about a year, and involved a very large amount of trades. It is not known if Mr Rusnak benefited personally. The bank believes there may have been collusion with others both inside and outside Allfirst.

The FBI has been notified of the investigation and has been asked for assistance. Senior executives at Allfirst and two staff members have been suspended pending the completion of the investigation.

A lawyer for Mr Rusnak has said that Mr Rusnak did not steal any money from AIB and that he is still in Baltimore. Attorney David Irwin said he would be surprised if AIB came up with any evidence that his client stole money. Mr Irwin said he has been in touch with the FBI and the US Attorney's Office about the affair on behalf of Mr Rusnak.

In its first public reaction to today's reported fraud, Allfirst Financial admitted that its controls did not work. At a news conference in Baltimore, Allfirst executives said an investigation was under way to establish what happened.

The missing trader had been a solid performer and they suggested that personal greed may not have been a factor. They described the suspected fraud as very sophisticated and well-planned.

AIB have stated their 2001 earnings, due to be announced on 20 February, will be reduced by €596m as a result. Today, AIB share closed 16.5% lower in Dublin - down €2.27 to €11.35. AIB closed 17% lower in London. In New York at 7.30pm, AIB was 16% lower.