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Monday 25 September 2017

'Bondholders are f***ing us up the arse' – Anglo

David Drumm
David Drumm

TOM LYONS EXCLUSIVE

David Drumm, the chief executive of Anglo Irish Bank, believed international bondholders were "fucking us up the arse" in 2008 as the bank lurched towards collapse.

Mr Drumm made the comment as he pondered whether the bank could buy back its own bonds at a discount in a bid to stabilise itself at the start of 2008.

In new recordings and other documents, it is revealed that as far back as January 2008, traders inside Irish Life & Permanent (IL&P) and Anglo Irish were describing their mutual funding relationships as 'our "rinky dinky"'.

As the global financial crisis worsened, bankers inside Anglo exchanged expletive-laden conversations as it battled to survive – which was entirely at odds with its public statements of confidence about the bank's future. Both Anglo and IL&Ps relationship deepened over the next nine months until eventually IL&P stuffed over €7bn into Anglo in the last days of September 2008.

This meant that a heavy run against the bank's deposits was under way, just before the State stepped in and disastrously decided to guarantee Anglo, something which was not widely known.

As far back as March 2008 IL&P was putting ever greater sums on to Anglo's balance sheet for short periods of time around the bank's reporting dates to the market.

In March 2008, when the bank's share price collapsed dramatically after Bear Stearns fell in America, documents show that Anglo boosted its customer funding number by €2.6bn with money from IL&P, Royal Bank of Scotland and AIG.

IL&P gave €750m for a few days, Royal Bank of Scotland gave €570m for just one night, and AIG deposited €1.2bn on March 31 for days. In recordings around this time, an under-strain Mr Drumm said: "The bondholders are fucking us up the arse."

Recordings from the start of 2008 to the bank guarantee also show extensive interactions between Anglo and officials from the Financial Regulator / the Central Bank. In an email on March 16, 2008, Mr Drumm asks John Bowe of his Treasury team: "Will you put some thought into what the governor asked us to look at – how the Irish banks could help each other out? I want to get into dialogue with Central Bank and other CEOs on this sooner rather than later."

An internal memo within Anglo dated January 16, 2009, reviews the bank's "balance sheet management transactions" between 2007 and 2008.

Transcripts of other conversations between senior Anglo executives and Mr Drumm during the crisis reveal the high-octane atmosphere within the bank as it battled to survive.

Irish Independent

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