Fingleton boasted: We're very profitable
FORMER Irish Nationwide boss Michael Fingleton told the Government that his building society was a "very profitable institution" and that its loan book was "sound" -- just days before it had to be bailed out by the State.
But despite these assurances, Irish Nationwide now requires €5.4bn in state funding to survive -- and part of its loan book was later subjected to a 72pc write-down in value by the National Asset Management Agency (NAMA).
In the run-up to the state banking guarantee two years ago, Mr Fingleton wrote to the head of the Department of Finance to reassure him about the quality of Irish Nationwide's loan book.
He played down fears about the €2.9bn in Irish commercial loans given out by his building society, saying that €2bn of the sum was development-related.
"The society has identified a small number of transactions that could result in losses but the body of the book is sound. We also expect some modest fee income from the book," he wrote.
Mr Fingleton appeared to have concerns about how the Department of Finance viewed Irish Nationwide, saying its mortgage book could not be judged on a "fire-sale basis, which formed the basis of our discussion last night".
Mr Fingleton wrapped up his letter to the department's secretary general David Doyle on September 19, 2008, by saying his building society was a "very profitable financial institution".
Mr Fingleton's letter was published by the Dail's Public Accounts committee, which is investigating the events surrounding the granting of the €440bn state banking guarantee to Irish Nationwide and other financial institutions on the night of September 29, 2008.
Its chairman, Fine Gael TD Bernard Allen, said it believed the information should be put in the public domain "to ensure full accountability and transparency regarding the decision to guarantee the banks".
Other documents published yesterday by the committee also show details of the investigation into Irish Nationwide's books carried out by global investment firm Goldman Sachs.
But Goldman Sachs chose to refer to Irish Nationwide using the code name "Harmony", a possible reference to its founding in a small room on Harmony Row, off Fenian Street in Dublin's city centre by a small group of working-class men.
It had been commissioned in early September 2008 because Irish Nationwide had been rocked by a report by the Reuters news agency (later withdrawn) which claimed it was in "talks with their lenders to avoid insolvency".
Although Irish Nationwide management told Goldman Sachs there could be losses in its loan book, their overall predictions were still optimistic.
"Management has a high degree of confidence in the quality and expected performance of the loans," the Goldman Sachs report said.