Pubs chain Mitchells & Butlers was thrown into fresh crisis today after its finance chief quit over a business gamble on interest rates that cost the firm £274 million.

Karim Naffah’s resignation has been accepted by the M&B board, but an offer to quit by chief executive Tim Clarke has been rejected.

Mr Naffah, who earned £386,000 last year, has taken the blame for a major investment last summer that went disastrously wrong when interest rates went down.

He will also lose a bonus that was expected to earn him £380,000.

Mr Clarke will also lose his bonus, believed to be £543,000.

The Express & Star revealed yesterday that the money was lost in an investment taken out as part of a £4.5 billion property deal with major shareholder Robert Tchenguiz, effectively betting on interest and inflation rates to help cover the borrowing costs of the deal.

But the property deal fell through when potential investors pulled out in the wake of the credit crunch, and with interest rates now on the way down M&B has lost tens of millions on the so-called “hedging” investment.

The company said today it had drawn a line under the matter by paying off the hedging deal at a cost of £274 million after tax.

As a result of the loss Mitchells & Butlers says all its executive directors, incl-uding Mr Naffah, will give up their 2007 bonuses.

On Thursday M&B chairman Roger Carr will have to explain the company’s fin-ancial woes to shareholders at the firm’s annual meeting.

He will be hoping to calm the waters with news of improving performance in M&B’s pubs and restaurants over the Christmas and New Year break.

M&B currently runs around 2,000 outlets including the All Bar One, Harvester and O’Neills chains.

It has another 30 pubs and restaurants in this region, such as The Goose and Mermaid pubs in Wolverhampton, the King Arthur in Dudley and the Crown & Anchor in West Bromwich.