A SENIOR bank official said he knew Sean Quinn's secret stake in Anglo Irish Bank could destabilise the financial system of the entire country.
And Brian Gillespie said the second-in-command at the Financial Regulator's office had been "very positive" about a loans-for-share deal, that would unwind the businessman's contracts for difference (CFD) holdings, a court heard.
Mr Gillespie told the trial of three Anglo executives that he was working on Saturday July 12, 2008, and sat in on a conference call between Morgan Stanley, the finance group executing the deals, and Con Horan, then prudential director at the regulator's office.
"He was very, very, very positive about the transactions," said Mr Gillespie, then head of compliance (Ireland), about Mr Horan – who rang Anglo's chief financial officer, Matt Moran, before and after the conference call.
Robert Heron, a partner in the bank's legal advisers Matheson Ormsby Prentice (MOP), was also "pro" the deal in a second conference telephone, he added.
Mr Gillespie said Morgan Stanley had set the agenda of the calls as part of its "due diligence process" and agreed it wanted to be given the go ahead "from the horses mouth".
"As far as I understand there was no question of them not being satisfied," he added.
Loans to 10 high profile customers – later known as the Maple 10 – for €60m for loans were signed off by four executives the following week, without ever going before a credit committee, the trial also heard.
Mr Gillespie said hedge fund managers were pushing down the bank's share prices, because of the Quinn family's stake in the bank through CFDs, affecting confidence in the bank and the confidence of depositors.
"I could see why this was a major problem and I could see why it could destabilise the financial system of the entire country," he added.
Anglo's former chairman Sean FitzPatrick (65) from Greystones, Co Wicklow; former chief risk officer William McAteer (63), from Rathgar, in Dublin; and 51-year-old Pat Whelan, from Malahide, in Dublin, have all pleaded not guilty to 16 charges of unlawfully providing financial assistance to individuals for the purpose of buying shares in Anglo Irish Bank in 2008.
Mr Whelan (managing director of lending (Ireland) also denies seven charges of being privy to the fraudulent alternation of a loan facility letter.
Developer John McCabe, the fifth member of the so-called Maple 10, told the trial he was not a major investor but took part in loan for shares plan because he was anxious to help a bank that had been very good to him for years.
He met Mr Whelan, Anglo's "head lender", and then chief executive David Drumm at the bank's headquarters in July 2008 who explained four or five investors were needed to buy a 10pc stake held by a large investor, he said.
"We asked all the relevant questions," said Mr McCabe.
"Was it legal? I was told it was totally legal.
"Who was aware of it? I was told the Financial Regulator was aware of it, the Central Bank, the Department of Finance and MOPs. And that the Financial Regulator was anxious to get it done."
Mr Drumm is in the US and is not on trial. The case continues.