Friday 30 September 2016

We took too much comfort from history: ex-AIB boss

Clodagh Sheehy

Published 24/04/2015 | 02:30

Dermot Gleeson, former chairman of AIB, arrives at Leinster House for the Oireachtas Banking Inquiry yesterday. Picture: Tom Burke
Dermot Gleeson, former chairman of AIB, arrives at Leinster House for the Oireachtas Banking Inquiry yesterday. Picture: Tom Burke

CONTROLS on loans to developers by AIB were not “savage” enough and “we have to take the blame”, former AIB chairman Dermot Gleeson has told the Banking Inquiry.

  • Go To

Mr Gleeson said his bank had lent too much to individual developers and “there were decisions made in AIB which made things worse than they need have been for Irish citizens.”

He explained that many of the big property developers at the time were successful customers of the bank for 20 to 30 years who had always repaid their loans on time.

“I’m afraid we took too much comfort from that history”.

Mr Gleeson offered his “sincere regret” to the Irish people for his part in the banking crash.

The former Attorney General, who was present in Government Buildings on the night of the Bank Guarantee, said his bank had asked that the guarantee be provided to four banks that did not include Anglo and Irish Nationwide.

The former bank chairman also said Finance Minister Brian Lenihan had told him that night that he would have preferred to wind down those two banks and that he was prepared to let them close.

Mr Gleeson would not be drawn, however, on whether Mr Lenihan was overruled.

Senator Marc MacSharry asked whether the former minister had shared anything else with him about the decision.

Mr Gleeson said he didn’t and was acutely aware of the fact Mr Lenihan couldn’t give his version of events.

AIB had proposed that Anglo and Irish Nationwide banks be “decommissioned in some way” and the guarantee given to the remaining banks to protect them against inevitable turmoil from the liquidation or nationalisation Anglo and Irish Nationwide.

Mr Gleeson said he was not aware that all of the six main banks had been guaranteed when he left Government buildings in the early hours of September 30, 2008.

He became aware this had happened through media reports early the next morning.

The bank representatives, he said, were not present in the room when the decisions were made.

The Governor of the Central Bank said during the meeting that it could be “disorderly” or “there could be a fumble” if Anglo were dealt with midweek.

“So what was needed was for AIB and BOI to try and provide €5bn each in liquidity to support Anglo until the coming weekend,” explained Mr Gleeson.

“Most of the evening was spent in efforts by BOI and AIB to assemble enough liquidity to keep Anglo going until the weekend.

“That effort was successful and by morning, €10bn in liquidity had been assembled, with its repayment seven days later to be underwritten by the Government,” he added.

Asked by Senator Susan O’Keeffe whether he was surprised that an NTMA team present in government buildings that night were never consulted he responded: “Nothing would surprise me at this stage” but “I was surprised, yes”.

Pearse Doherty TD asked why AIB had paid out a €270m dividend to shareholders just three days before drafting the Bank Guarantee. Mr Gleeson said it was “undoubtedly a mistake” done to reassure the markets.

Online Editors

Read More

Promoted articles

Editors Choice

Also in Business