Allied Irish Banks will still make a "considerable profit" despite the reported major fraud in its US subsidiary, Allfirst, according to the Minister for Finance.
Mr McCreevy said the bank would take "a once-off hit" in its profits for 2001.
It was not a "disastrous situation" from the point of view of Irish financial markets. Echoing the comments of the Taoiseach earlier yesterday, Mr McCreevy said "there is no threat at all to AIB group and people can rest assured about that".
It was however, a "reminder to the management of the bank, of other banks and to regulators and legislators of the importance of ensuring that financial institutions are well capitalised and that their internal systems are up to the job".
During a special notice debate yesterday evening, Labour's finance spokesman, Mr Derek McDowell, said it was "astonishing that the actions of apparently just one man could lead to a loss of such extraordinary proportions". It demonstrated that the regulatory systems were "not up to the job", given that the fraud had been going on for a year.
The Minister said, however, "if two people are in collusion, the best system in the world will have difficulty in tracking them down". The US Federal Reserve looked at the bank in the middle of last year and gave it an "absolutely clean bill of health".
However, Mr McDowell said it was the country's biggest bank and surely some measures could be put in place to prevent one individual doing what was apparently done in this instance. He added that the Minister and the Central Bank "must take measures to discover exactly what happened".
Mr Paul McGrath (FG, Westmeath) said it raised serious questions about AIB's internal and external auditing systems. Mr Charlie Flanagan (FG, Laois-Offaly) said it looked like the lessons of Barings bank and the Nick Leeson fraud had not been learnt and he said it would be a matter of "fundamental unfairness" if AIB could set the fraud off against its tax.
However, Mr McCreevy said it would not set it off against tax but as an expense against its profit and loss. "Obviously, to the extent that the bank loses, the value of the bank must be affected and some loss was inevitable in the circumstances."
He said the legislation for a regulatory authority for the financial services sector had "no bearing at all" in this issue because what had happened occurred in the US.
He had, however, asked the Central Bank to report to him following its investigations, to ascertain whether any changes in legislation on banking supervision might be required.
