News Analysis

Friday 22 August 2014

They gambled all our futures but it was just fun and games for bankers

Fionnan Sheahan

Published 24/06/2013 | 07:00

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Anglo executives David Drumm, Peter Fitzgerald and John Bowe pictured together in 2006

'Fun and games, yeah." The future of the country is being gambled and it's all just fun and games for the executives in Anglo Irish Bank.

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What whacks you between the eyes upon listening to 'Inside Anglo: the secret recordings' is the flippant manner in which the high-stakes venture is being discussed.

The phone call between two senior executives in Anglo Irish Bank confirms all your worst perceptions, notions and theories of how the country ended up bankrupt.

Your worst nightmares.

In fact, upon listening to the conversation, your interest is initially piqued by the locker-room chatter.

Apart from the frequent bursts of laughter, John Bowe, Director of Capital Markets, and Peter Fitzgerald, Director of Retail Banking, occasionally engage in random office gossip in the middle of a conversation where so much is riding.

Even though you know the plot, climax and end of this particular horror film, it's still harrowing to listen to the epilogue unfold.

The curiosity leads to intrigue as the two discuss how Bowe and other Anglo executives had met with the Central Bank the previous day, seeking an emergency loan of €7bn as the bank's financial position was deteriorating rapidly.

Unfortunately you don't get any impression Anglo had much respect for its regulators.

The disconsolate feeling of being let down by the watchdogs permeates through you.

The knock-on effect for the Irish banking system is immediately evident as Anglo's precarious status will drag in Bank of Ireland and Allied Irish Bank.

Your jaw hits the floor when you hear the awareness of the depth of the crisis in advance – especially with the benefit of hindsight, where you know the outcome.

Listening to a pretty accurate prediction of how the saga will play out leaves you exasperated, as you know the State is going to step in and fall into the trap.

It's like listening to the engineers in Chernobyl tinker with the nuclear reactor before the meltdown.

But the frustration soon leads to rage – table-thumping, bin-kicking, scream-out-loud fury.

The penny drops – €30bn worth.

Anglo Irish Bank becomes Anger Irish Bank.

The entire bailout of the banking system, which has put the country into penury for decades to come after the taxpayer was forced to inject €60bn of funds to keep the entire sector afloat, was based upon a fabrication.

From the off, before the bank guarantee was signed, there was a knowledge within the bank that not even €7bn would be enough.

* Bowe: "Yeah and that number is seven, but the reality is that actually we need more than that. But you know, the strategy here is you pull them in, you get them to write a big cheque and they have to keep, they have to support their money, you know."

* Fitzgerald: "Yeah, yeah, yeah, yeah, yeah. They've got skin in the game and that's the key."

* Bowe: "They have, and they have invested a lot. If they saw, if they saw the enormity of it up front, they might decide, they might decide they have a choice. You know what I mean? They might say the cost to the taxpayer is too high. But . . . em . . . if it doesn't look too big at the outset . . . if it looks big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you have a chance."

Anglo knew a continual stream of funding would be required and was duping the Central Bank into keeping it afloat.

This blight on the past, present and future of the country knowingly tricked the government into rescuing it from collapse, despite knowing its predicament was far worse than acknowledged.

Indeed, its senior management gloated about the prospect of suckering the administration of the State to ensure its survival.

The revelations in this conversation, from the highest levels of the bank, prove, beyond a doubt, that in the case of at least one bank, executives inside the lender knew their employer was ruined even as they cynically set out to lure the country into propping up the institution.

Unwary and frankly incompetent officials at the Financial Regulator's office and Central Bank came off second-best against bankers who were all too competent when it came to preserving their own institution.

Regrettably, it's also proof that banks are bigger than countries and whatever has to be done will be done to save one from oblivion.

And yet the public is only learning this now, five years later, through this newspaper. This is the kind of smoking gun a banking inquiry should have revealed, yet scandalously this hard evidence has been sitting around waiting to be uncovered all that time.

The country is going to be paying this bill for decades to come so its citizens need to learn how we got into this calamity.

Who knew what, how and when?

The public has a right to know, to develop a sense of understanding, to ensure sufficient pressure so there can never be a repeat.

Anger can't be the only sensation overflowing from the Anglo Irish Bank affair.

Irish Independent

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