Saturday 21 January 2017

Banks did not offer solution to Government on night of bank guarantee - Burrows

Clodagh Sheehy

Published 14/05/2015 | 08:13

Former Governors of Bank of Ireland Laurence Crowley (left) and Richard Burrows arriving for the Oireachtas Banking Inquiry at Leinster House.Pic Tom Burke
Former Governors of Bank of Ireland Laurence Crowley (left) and Richard Burrows arriving for the Oireachtas Banking Inquiry at Leinster House.Pic Tom Burke

The banks did not offer solutions to government on the night of the Bank Guarantee, former Bank of Ireland Governor Richard Burrows has told the Banking Inquiry.

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Mr Burrows said with AIB they had sought a meeting with government on the night of September 29th 2008 to make them fully aware of the difficulties at Anglo Irish Bank.

Neither bank had gone to the meeting with any solution.

Both banks had been asked to come up with €5bn each to finance Anglo and when they returned to the meeting to say they could come up with the funding they were told the Guarantee was being put in place.

He understood it was for all banks “not four or six”.

Earlier the inquiry heard that property lending by Bank of Ireland did not grow in a “disproportionate” fashion in the run up to the crisis.

The €10bn offer by Bank of Ireland and AIB on the night of the Bank Guarantee could also have given the government other options said former governor Richard Burrows

Mr Burrow pointed to the willingness of the two banks  to provide €5bn each in financial support for Anglo Irish Bank that night and if  accepted “such a decision may have given the Government more time to consider options”.

However he wanted to place on the record that the bank appreciated the government action in providing the Guarantee, the subsequent capital injection for the bank and the creation of NAMA

Laurence Crowley who was Governor of the bank from 2002-2005 insisted it was not reliant on property lending and this did not grow in “a disproportionate fashion” to other lending.

Former Governors of Bank of Ireland Laurence Crowley (left) and Richard Burrows,t arriving for the Oireachtas Banking Inquiry at Leinster House. Pic Tom Burke
Former Governors of Bank of Ireland Laurence Crowley (left) and Richard Burrows,t arriving for the Oireachtas Banking Inquiry at Leinster House. Pic Tom Burke
Former Governors of Bank of Ireland Laurence Crowley (left) and Richard Burrows arriving for the Oireachtas Banking Inquiry at Leinster House. Pic Tom Burke

Mr Burrows, who took over from Mr Crowley until 2009,  echoed that view and said while the overall loan book of the bank grew very considerably, unlike certain other banks “property lending did not grow in a disproportionate fashion”.

Mr Crowley explained that Bank of Ireland had an ambitious growth strategy but this had to be viewed in relation to a rapidly growing economy.

It was not, he said, reliant on property lending but on a combination of acquisitions and managing the capital of the bank.

“We were particularly focused on growing business outside Ireland”.

During his time with the bank, he added, “the internal controls to identify, manage and monitor risks were appropriate having regard to the business of the Bank at the time”.

He did not recall any issues of “imprudent lending being brought to the Board”.

Mr Crowley said when he left the bank it was operating in a strong economic environment.

With hindsight if any decisions were taken in his time which subsequently contributed to the banking crisis “then this is clearly something I regret”.

Mr Burrows told the Inquiry it was “a source of great regret to Bank of Ireland that we required substantial support from the Irish taxpayer and the State.”

That support was comprehensive and “for that we remain very grateful.”

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