Saturday 10 December 2016

Nationalisation of Anglo Irish discussed in week before bank guarantee was introduced- banking inquiry hears

Clodagh Sheehy

Published 09/09/2015 | 10:51

anglo building
anglo building

The nationalisation of Anglo Irish Bank was discussed at a meeting in the week ahead of the the introduction of the bank guarantee in September 2008, PwC executives also told the inquiry.

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Denis O’Connor, partner at PwC, told Chairman Ciaran Lynch that the bank guarantee had also been discussed in meetings with advisors prior to it being introduced on September 29.

He said he was present at a number of meetings where it was discussed.  The Taoiseach - Brian Cowen - was present at one of those meetings and the Minister for Finance - Brian Lenihan was present at all of them.

He could not be sure of the dates of the meetings but said they were around the 23rd or 24th of September 2008.

The Guarantee, he stressed, was not the main focus of the meetings although it was discussed.

The meetings were attended by IFSRA the Central Bank, Department of Finance about 25-30 people including advisors.  The meetings lasted several hours.

The top 10 borrowers owed €17.7bn to the six pillar banks by November of 2008, the Banking Inquiry was also told today.

Mr O'Connor described how his company had been called in by Financial Regulator Patrick Neary on September 18th 2008 who told them he needed “urgent assistance” to look at liquidity in the Irish Banks.

“Mr Neary explained to us that he was very concerned about the impact the global financial crisis and the freezing of the interbank funding markets was having on the Irish banking system.”

He said the Regulator suggested they focus on the top 20 lending exposures.

Mr O’Connor explained they had immediately begun with an examination of Anglo Irish Bank the following day and within a number of days had been asked by the Regulator to also include Irish Life and Permanent and Irish Nationwide Building Society.

He said it became clear immediately that a number of Irish banks had “significant liquidity issues” and were "running out of money".

From the information they compiled within a few days they emphasised to the Regulator that a contingency plan would need to be put in place ASAP.

He pointed to an €8-10bn outflow from the banks in a number of days.

Mr O’Connor said the Regulator was aware there were issues “out there” but this had now been confirmed by a third party.

A week after the Bank Guarantee on September 29th they had been asked to extend the investigation further to cover the six top banks, their top 50 loans and top 25 land and development loans.

This showed “a very large exposure" of the banks to the top 10 borrowers amounting to €17.7bn.

“For all of us the surprise was very significant”, he added.

He explained the these figures did not include additional exposure from loans by Ulster Bank and Bank of Ireland Scotland who were not included in the six banks examined.

He also said that the work of PWC - known as the Atlas Project - was factual work on the loans and did not concentrate on the risks.

Mr Aidan Walsh, also a parter in PricewaterhouseCoopers stressed that during the period just before the Bank Guarantee the liquidity position of the banks was deteriorating on a weekly and on a daily basis.

In response to questions from Deputy Kieran O’Donnell, Mr O’Connor said PricewaterhouseCoopers had been paid €2.4m in fees for the three phases of Project Atlas between September 2008 and January 2009.

Between 25 and 28 staff had been employed and these included partners, directors and senior managers.

 

 

 

 

 

 

 

 

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