Former Anglo executive: 'Bank ran out of cash for normal daily payments'
Anglo Irish Bank had difficulty processing transactions amounting to €7.2bn between it and Irish Life & Permanent (IL&P) because it had run out of money to make its normal daily payments, a jury has heard.
The purpose of the transactions between Anglo and IL&P in September 2008 was so that a corporate deposit of €6bn to €7bn would be reported in Anglo's year-end figures.
Non-bank, or corporate, deposits have a greater value from the point of view of the market as they are considered "stickier" or more secure, the trial has heard.
Anglo's former director of treasury, Matt Cullen, was giving evidence on the second day of the trial of former Anglo executives John Bowe (52), from Glasnevin, Dublin; William McAteer (65), of Greenrath, Tipperary town, Co Tipperary; and former IL&P executives Denis Casey (56), of Raheny, and Peter Fitzpatrick (63), of Malahide, both Dublin.
They have all denied conspiring to mislead existing and potential investors, lenders and depositors by engaging in transactions between Anglo Irish Bank, IL&P and Irish Life Assurance to make Anglo appear €7.2bn better off than it was.
Mr Cullen said the executive directors of the bank were aware of the purpose of the transactions and he assumed the board was also aware. He also told Dublin Circuit Criminal Court that Anglo discovered after close of business on September 29, 2008, that it would not have enough funding to make its payment schedule the following day.
He said the bank managed to secure emergency funding of "€1.2bn or €1.3bn or €1.4bn" from the Central Bank so it could make its payments on September 30. He said the Central Bank was not informed of Anglo's plans to complete "€6bn or €7bn" in transactions with IL&P.
Mr Cullen told the court the bank guarantee scheme was introduced that night and on September 30, 2008 "billions, three or four billion was coming in" to Anglo.
On September 25, 2008, Mr Cullen said it was planned that Stg£900m would be transferred from Anglo Isle of Man to IL&P and then back to Anglo, through Irish Life Assurance. He said this money was to be on deposit in Anglo for only a few days, but it "had to be over the year end".
He said he spoke to his colleague Ciaran McArdle, who had been directed to complete the transaction, and told him he'd "done so much and couldn't do any more".
He also said he informed Mr Bowe about how much had been done and it was decided they'd try again the next day.
Mr Cullen said he couldn't recall if the Stg £900m transaction was completed on September 26 or September 27. He said the transactions continued on September 29, 2008 and it was to be done "in €1bn lots". He added that market conditions were extremely tough and for the first time ever Anglo "blocked" the system, as it didn't have enough money.
Mr Cullen said funds came onto the market later on September 29 and Anglo was able to make its payments, but was unable to do the "tranches of €1bn".
He said the bank guarantee was "extremely positive right across the Irish market", and while he was unsure of the exact deposit figure, he said "billions, three or four billion was coming in" to Anglo.
He also said he did not have any direct knowledge that the Anglo board was told about the transactions.