Ahern 'go-between' for bank money men
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Saturday November 22 2008
Former Taoiseach Bertie Ahern has emerged as a go-between as part of talks to assemble a multi-billion rescue of the Irish banking sector.
Mr Ahern recently contacted the Department of Finance to try to arrange a meeting with Minister Brian Lenihan on behalf of a potential investor in the banks, sources confirmed to the Irish Independent.
His name has been linked in financial circles with involvement in the banking negotiations. "Having an ex-prime minister on board opens a lot of doors," one source said.
"It lends a certain clout and respectability when you're trying to get to meet with big private equity houses and sovereign wealth funds."
There is strong speculation he is working with a foreign group, which has been weighing up putting money in an Irish bank.
The request for a meeting with Mr Lenihan was turned down and Mr Ahern denies playing any role whatsoever. But the Irish Independent understands from reliable sources that Mr Ahern made the contacts in the recent past.
Last night, a Fianna Fail spokesperson categorically denied Mr Ahern was involved in any capacity in the banking negotiations.
"Bertie Ahern is working for neither (the Government nor private equity groups) in that regard and is in full support of the minister for finance's work," the spokesperson said.
A Government spokesman also said Mr Ahern was certainly not working on behalf of Taoiseach Brian Cowen or Mr Lenihan. "He is not acting on anyone's part in Government. He has no involvement," he said.
The Department of Finance said it had no comment to make on the matter.
The Irish Independent revealed yesterday that two Irish dealmakers, Nigel McDermott and Nick Corcoran of Cardinal Asset Management, have assembled a grand coalition of private investment firms that is mounting a €2.5bn-€3bn bid to invest in Bank of Ireland.
Cardinal has lined up some private money in Ireland and the UK as well as some oil-rich sovereign wealth money from the Middle East.
In addition, they have brought US private equity firms Carlyle and KKR in on their consortium and, within the past few days, JC Flowers also. The consortium has also offered the State an opportunity to co-invest.
As a 'deal sweetener' to meet the Government's goal of massive sector consolidation, the private equity team have also pitched to merge Bank of Ireland with Anglo Irish Bank and Irish Life & Permanent.
IL&P is putting up a strong resistance to the Department of Finance's covert pressure to merge with Bank of Ireland as part of a mega-deal. The group, led by Denis Casey, yesterday confirmed to the stock market a report in this newspaper that it is in takeover talks with EBS Building Society.
IL&P is likely to have emphasised to Finance Minister Brian Lenihan -- who held a series of meetings at Farmleigh with senior banking executives on Thursday -- that the group could be a third force in Irish banking following an expected flurry of deals over the coming months.
Market
Scott Rankin, an analyst with stockbroker Davy, questioned the logic of a combination of Bank of Ireland and IL&P. "With over 50pc of the life market and 40pc-plus of the mortgage market, IL&P and BoI would certainly make sense for private equity investors, but it would not from a public policy perspective," said Mr Rankin. "AIB and IL&P and BoI and Anglo Irish Bank would offer far more balance and competition."
Meanwhile, three major foreign shareholders in Bank of Ireland have sought legal advice in recent days about seeking an injunction if existing shareholders are locked out as part of a deal to inject fresh funds into the group.
Mr Cowen was also present at Farmleigh while the talks were ongoing.
However, he was not involved in the face-to-face meetings with the bank chiefs. The Taoiseach was regularly briefed by Mr Lenihan on the talks and continues to be closely involved in the process.
The banks have undertaken to return to the minister on issues raised arising from a report into their solvency within a week.
Mr Cowen said Brian Lenihan had asked the six banks to "reflect on some of the issues arising" from the report by accountants PriceWaterhouseCoopers, but declined to give details.
"Obviously, it's a very commercially sensitive report," Mr Cowen said in Mullingar yesterday. "We can't go into the details of that," he added.
But the Taoiseach said the banks "will resume those discussions and come back to him in a week's time".
- Joe Brennan and Fionnan Sheahan
