Anglo Tapes

Thursday 24 July 2014

'AIB and Anglo lending to every cowboy in town'

Tapes show Bank of Ireland believed others were 'playing fast and loose' with money

Paul Williams, Fionnan Sheahan and Fiach Kelly

Published 01/07/2013|04:00

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Allied Irish Bank was viewed by its main competitor as lending money to "every cowboy in town", senior bankers reveal in the Anglo Tapes.

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In the run-up to the banking collapse, Allied was viewed by Bank of Ireland as being as reckless as Anglo.

AIB and Anglo have now cost the taxpayer €50bn to rescue – with the bill still rising. But both were viewed by competitors as having a careless approach to loans. On the tapes, Anglo executive John Bowe tells former CEO David Drumm: "They (Bank of Ireland) think that Allied have played fast and loose with lending money to every cowboy in town – apart from ourselves also lending money to every cowboy in town."

The disclosure comes as President Michael D Higgins expressed his outrage at the Anglo Tapes, saying the recordings of the bankers were "not the voices of the people of Ireland".

Anglo chief executive David Drumm is still refusing to return home from the United States to assist with the investigation into the bank.

The latest disclosure will turn the focus of the scrutiny of banking on to the management of Allied, widening it beyond Anglo.

Offering an insight into the views within the banking system, Bank of Ireland reportedly viewed Allied's performance with suspicion, just months out from the bank guarantee.

Former Anglo CEO David Drumm

The tapes also shed further light on the culture within the banks as executives discuss getting funding from an investment bank by only naming their figure when he has drunk "five vodkas" or "a bottle of Cristal" champagne.

In new tapes obtained by the Sunday Independent, Mr Bowe says Bank of Ireland could not understand why its share price was falling faster than AIB's.

"They think . . . they've been the sensible bankers and the market just doesn't get it," he tells Mr Drumm.

Mr Bowe says Bank of Ireland cannot "for the life of them" understand what is happening to the share price as it drops in the summer of 2008.

"Because I actually have heard nothing," he says.

Mr Drumm replies that nobody is saying anything about them, "like they've more bad debts or anything".

Mr Bowe says Bank of Ireland is particularly frustrated at seeing AIB being let off lighter by the markets.

"What is exercising Bank (Bank of Ireland) more than anything else is why they're being beaten up more than Allied (Allied Irish Banks)," he says.

Five years on, the opinion within Bank of Ireland would appear to be well founded, because:

* Anglo has now been liquidated at a cost of more than €30bn.

* Allied is 99.9pc owned by the State and has already had €20.7bn put into it – and its bailout will possibly top that of Anglo.

* Bank of Ireland is 15pc owned by the State after having €4.7bn put into it.

Bank of Ireland is in a far healthier position for recovery than AIB.

As the fallout from the Anglo Tapes continues, the Government is signalling it will proceed with an Oireachtas inquiry into the banking crisis without holding a referendum on new powers.

President Michael D Higgins has expressed his outrage at the Anglo Tapes, lashing out at the "greed and recklessness" of bankers.

Speaking on behalf of the nation, he said the bankers did not represent the voices of the people of Ireland.

He said the bank executives' attitude and the banking culture "do not reflect our core values as a nation".

Mr Higgins described the bank executives as the "voices from the past" and do not make for easy listening.

He said: "But let us be certain of one thing, particularly as I speak to people who are drawn from communities in Ireland.

"These are not the voices of the people of Ireland, and the attitudes that they reveal are not shared by the people of Ireland, and the behaviours they reflect are not characteristic of the people of Ireland."

FOOLISH

His comments generated a warm round of applause from guests at an Aras an Uachtarain garden party.

Meanwhile, former Director of Public Prosecutions James Hamilton said the publication of the Anglo Tapes was in the public interest.

"There is no doubt that the more publicity there is, the greater the risk. At the same time, I accept there is huge public interest in all of this, and it is very difficult to dampen things down and to expect there will not be reporting of matters like this," he said.

Mr Hamilton also said it would be "foolish" to proceed with an Oireachtas inquiry before criminal trials.

"The difficulty is that if you have an inquiry closely in advance of a trial, you will strengthen the argument of defendants that the atmosphere is such that they cannot receive a fair trial," he said. "If we're talking about trials taking place next year, I think it would be foolish to embark on a major inquiry before."

Bank of Ireland and AIB did not return calls seeking comments last night.

Irish Independent

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