Regulator knew of IL&P loan but did not query it
The Financial Regulator did not query the controversial Irish Life and Permanent multi-billion loan to Anglo Irish Bank for almost a month despite being updated on a daily basis about the huge transactions.
As part of normal procedures, IL&P, along with other financial institutions, had been informing the regulator on a daily basis of its liquidity position.
One daily report submitted on October 1 to the regulator by IL&P contained details of a €4bn lodgement to Anglo Irish Bank from IL&P's subsidiary, Irish Life Assurance (ILA), made the previous day.
It also contained details of €4bn lodged to IL&P by Anglo Irish Bank. The Financial Regulator had no prior notice that the dealings would take place.
Sources told the Irish Independent that on October 24, the Financial Regulator's office contacted IL&P's then chief financial officer Peter Fitzpatrick to query the transactions on foot of the Government's PricewaterhouseCoopers (PwC) report.
While the Financial Regulator's office did not raise any immediate concerns with IL&P about the precise nature of these transactions, it's unclear whether the full nature of the dealings between IL&P and Anglo was made known to the Financial Regulator at that time.
The Financial Regulator's office declined to comment directly on the October discussions with IL&P, but stressed yesterday that the nature of the dealings the bank had with Anglo were "never approved before or after the event and the matter is still subject to a vigorous investigation".
Deposits
Daily liquidity reports provided to the Financial Regulator's office by Anglo in late September and early October would have revealed that it was receiving multi-billion euro deposits.
IL&P and Anglo remain at odds over the nature of the transactions in the run up to the announcement of the Government's €440bn deposit guarantee scheme in September.
According to reports yesterday, Anglo's finance director Willie McAteer had informed then Financial Regulator chief Patrick Neary last September that the bank would be "managing" its balance sheet. It was also alleged yesterday that a member of staff at Anglo Irish Bank informed the Financial Regulator's office that it had been "trying to manipulate" its balance sheet prior to its financial year-end last September.
Knowledge
The Financial Regulator said yesterday that there is "no question" of anyone in its office having any prior knowledge of this "nor is there any question of the Financial Regulator giving endorsement of this and to suggest a junior official would have the authority to approve or condone anything of this sort is completely incorrect".
In-depth clarification on IL&P's dealings with Anglo Irish Bank were sought by the Financial Regulator in late January by the unit's new head, Mary O'Dea.
She allegedly confronted IL&P officials in an "aggressive" manner over the dealings with Anglo. IL&P then reportedly approached the Department of Finance regarding Ms O'Dea's queries. Department officials did not reportedly express any concerns to IL&P executives at that time over the bank's dealings with Anglo.
- John Mulligan
