‘No plan’ for Anglo as bank was on brink of €1.6bn loan default
Published 15/05/2015 | 02:30
The Central Bank had no plan for Anglo Irish Bank just hours before it was due to default on a €1.6bn loan, the Banking Inquiry has heard.
Former Bank of Ireland governor Richard Burrows said Central Bank Governor John Hurley “seemed surprised” when he told him about the “state of desperation” of Anglo on the afternoon of September 29, 2008.
Mr Burrows said Anglo bosses Sean FitzPatrick and David Drumm had requested a meeting with his bank earlier that day.
They had asked if Bank of Ireland would take over Anglo fully, or in part. “They were looking for any kind of assistance at all we could offer.”
Mr Burrows said a short while later he attended a pre-scheduled meeting with Mr Hurley, where he explained the Anglo position and asked if there was a plan.
“I was somewhat surprised to find there was not. Mr Hurley’s guidance to me was that if I wanted to take matters further, I should make an approach to government.”
The representatives of Bank of Ireland and AIB met the Taoiseach Brian Cowen, Finance Minister Brian Lenihan and “quite a number of other people” at Government Buildings.
During the meeting, Mr Hurley asked if the Anglo default could be covered by Bank of Ireland and AIB providing €5bn each by the following morning.
The bankers went to an ante room to discuss this and when they returned to report that Bank of Ireland and AIB had been successful in putting together the €10bn, “it was at that point we were informed that a guarantee was going to be put in place”.
The banks did not offer solutions to the Government on the night of the bank guarantee, said Mr Burrows,
He said they had sought the meeting to make the Government fully aware of the difficulties at Anglo Irish Bank.
Mr Burrows told the inquiry he believed that if the €10bn being offered in financial support for Anglo that night had been accepted, it “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.
While the €10bn liquidity for Anglo might have bought breathing space, the guarantee was necessary, he added.
Both Mr Burrows and Mr Laurence Crowley, also a former Bank of Ireland governor, insisted that property lending by their bank did not grow in a “disproportionate” fashion in the run-up to the crisis.
Mr Crowley added that, with hindsight, if any decisions were taken in his time that subsequently contributed to the banking crisis “then this is clearly something I regret”.
Mr Burrows said 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”.