FRM Exam

Early Warning Indicators: AIB Currency Trading Losses

There were many early warning indicators or missed opportunities for AIB or Allfirst to have detected Mr. Rusnak’s fraud. These missed opportunities are discussed below: 1. Failures of Rusnak’s superiors to adequately supervise his activity Mr. Rusnak’s supervisors— his departed … Continued

AIB: Discovery of Fraud, and Magnitude of Losses

Discovery of the Fraud Mr. Rusnak’s fraud scheme started unravelling in early December 2001. This happened when the back office supervisor came to know that the option trades were not being confirmed and the back office employee explained to him … Continued

AIB/Allfirst Structure, Treasury and Forex Trading

In this case study we will discuss the losses sustained by Allfirst Financial Inc. and Allfirst Bank in foreign exchange trading. The primary person responsible is john N. Rusnak. In this first part we look at the relationship between AIB/Allfirst, … Continued

How Icelandic Banks Funded their Risky Business Models

Even after the mini-crisis in 2006, the Icelandic banks were able to fund themselves. The banks had three primary funding sources: 1. Issuance of commercial paper and bonds 2. Foreign wholesale and retail deposits 3. Loans, including bilateral and syndicated … Continued

How Icelandic Banks Underplayed their True Riskiness?

Before the financial crisis began, even though all the warning signals were there, the top three Icelandic banks were able to underplay their true riskiness. Moody’s had assigned high credit ratings to all these banks. Moody’s ratings consider both quantitative … Continued

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