Anglo and IL&P divided on €7.5bn deposit
Saturday February 21 2009
ANGLO Irish Bank and Irish Life & Permanent (IL&P) remain deeply divided in their respective accounts of the €7.5bn that was swapped between the two institutions in the run-up to the Government's €440bn guarantee plan.
The two institutions have been at loggerheads over the €7.5bn, which IL&P maintains was a collaterised deposit made by it into Anglo.
Effectively, it claims it received money in turn from Anglo in order to guarantee those deposits IL&P placed with the now nationalised bank.
The money helped to flatter Anglo's balance sheet prior to its financial year-end.
But Anglo has maintained that the massive temporary injection from IL&P was not collaterised, and that it was part of a normal inter-bank arrangement between the two institutions.
Yesterday in its accounts, Anglo Irish Bank said that it had had an "active counterparty relationship" with IL&P for a "long period of time".
It says that as part of on-going business activity, this relationship has included placements and receipts of deposits from bank and non-bank affiliates, with transactions categorised as deposits from banks or non-retail customers "as appropriate".
Anglo added that on September 30, its group balance sheet included €7.5bn of short-term interbank placements with IL&P, and €7.3bn of short-term interbank deposits with Irish Life Assurance.
"No set-off arrangements exist between these placements and deposits," said Anglo yesterday, confirming that it had engaged independent advisers to review the transactions.
The flow of money to Anglo from the IL&P group forced the resignation of IL&P chief executive Denis Casey, while the Financial Regulator launched a probe into the activities.
The regulator previously said it "utterly rejects" any suggestion that its encouraging banks to work together to use normal inter-bank funding arrangements for liquidity purposes, should have led to institutions engaging in the type of "circular transactions" evidenced between IL&P and Anglo.
The furore claimed the scalps of three top IL&P executives last week, including Mr Casey.
- John Mulligan
