Business Anglo Tapes

Monday 22 September 2014

'If we got the four billion ... from that shower of clowns on Dame St.'

Gavin Sheridan and Tom Lyons

Published 07/07/2013 | 05:00

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Denis Casey
Gillian Bowler

It is September 2008. Lehman Brothers has collapsed and Anglo desperately needs to get more money in before its year end. If it comes out and says there has been a massive run against it the bank feels this will trigger an even greater meltdown. John Bowe and David Drumm are discussing the international banks and funds which are taking money out and putting money into Anglo. The level of distrust between banks worldwide means Anglo can only convince them to leave money with it for a few weeks or even days. Bowe explains to Drumm that the money is going out much faster than it is coming in. Anglo needs €4bn fast to keep going and the two men want the Central Bank to cough up. They also discuss the bank's "run rate" or how quickly it will exhaust its cash and topple over. In total they estimate Anglo could be short €10.5bn.

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Note: DD is David Drumm. JB is John Bowe. Brackets indicate explanatory insertions by this newspaper.

 

David Drumm: If we got the four billion or if it was available from that fucking shower of clowns down in Dame Street [the Central Bank] . . .

John Bowe: Yeah.

DD: That is eight and a half billion right. Now I have got ostensibly 17 days at today's run rate.

JB: Yeah.

DD: But I don't see today's run rate because retail is going to recover you can just feel it. We're going to run out of the stupid layer, the two and a half billion . . .

JB: So another way of putting it is we thought we would need let's say 10 and a half to €11bn short . . .

DD: Yeah.

JB: We would run out of our liquidity.

DD:: Yeah.

JB: And we would have a hole of 10 and a half billion.

DD: Yeah.

DD: We're fucked. We've 10 billion of lending and two billion of customer funding even with the fixes. What that means is we've actually 10 billion of lending and minus four billion of customer funding.

Both bankers realise that Anglo is looking ever more doomed. Drumm frets about what will happen when Anglo must disclose to the market just how much money it has lost at its financial year end on September 30, 2008. If it discloses that it has lost billions in deposits this will undoubtedly lead to an even greater bank run.

DD: The balance sheet will just look shot.

JB: Yeah.

DD: Are you going to bloat the balance sheet on the right hand side over year end? With short term interbank and all that sort of and shove it into liquidity, or?

JB: Em.

DD: I just think you should get out your own benefit right now. What the balance sheet at the end of September actually looks like . . . this is not going to go away that if this photograph is ever published on fucking Bebo it doesn't look that great.

JB: Yeah.

DD: It's curtains at that point.

JB: It is yeah.

DD: I just need us all to focus on that, that we can't afford to get there therefore. We have to get a get out of jail card.

The conversation then turns to Irish Life & Permanent (IL&P) led by chief executive Denis Casey and chairwoman Gillian Bowler, a former travel agent. Anglo wants IL&P to give it billions to fill up the ever growing hole in its balance sheet. Anglo had recently met with Casey and Bowler in the Westin Hotel in Dublin to discuss the matter.

JB: You didn't get much change down in the Westin Hotel?

DD: Well, did you get any feedback on it?

DD: Gillian [Bowler] was listening. We did well. We thought. We got our points across really hard. Made it compelling because it is, we felt that the punches landed and that Gillian was listening but your man [Denis Casey] had a fucking brick wall built in front of him. He was refusing to be involved and kept saying very, very stupid things like look it if this was two years ago yeah or two years time but not when this crisis is going on. You know. But we kept saying yeah but Denis we're here because of the crisis.

JB: Hmm.

DD: So she was hearing that. He wasn't. We kept saying we've got lots of options we are a very attractive business. You know. He was behaving like somebody who has some magic formula to survive the credit crunch which he doesn't. We stopped short of insulting him by saying look you can repo your book all you fucking want but eventually you are going to be downgraded and then you are going to go out of business. And by the way nobody in your business has survived really so why would you. We felt she got it without her telling us 'listen look I believe you' we felt she got it based on the body language and some of the questions but that he is just mind numbingly blocking it.

JB: But eh he is over in the corner with his hands on his head.

DD: That's it. Hear no evil.

Bowe suggests getting the State to put IL&P under pressure to help Anglo.

JB: Can you get somebody at the regulatory level to kind of put a cattle prod up them.

It is important to note here that the Financial Regulator has stated it did not encourage or approve the IL&P transaction which eventually took place between it and Anglo. Bowler and Casey have also streniously denied any wrongdoing. The two Anglo executives then discuss how tough things really are and what a desperate situation they are facing.

DD: It's the last fucking roll of the dice but we walked away saying that's not dead.

JB: Okay.

DD: So let's just see. Let's not manage expectations. Your man [Denis Casey] was just blank, blank, total blank but she [Gillian Bowler] wasn't saying yes but she wasn't saying no is the best way of describing it to you. It is quite frustrating but we have to keep going.

JB: There is plenty of that.

DD: Let's just keep whacking our heads off that wall to see if we can eventually split it open.

JB: Something will split open anyway David.

DD: It fucking will.

Irish Independent

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