Anglo will not pay legal bills for FitzPatrick
Bank prepares to re-enter the property market
Former Anglo Irish Bank chairman Sean FitzPatrick will not have his legal bills paid under the bank's multi-million euro indemnity insurance policy for past directors.
"There's no way Anglo will be paying any of FitzPatrick's legal bills," according to one well-placed source.
"The bank cannot comment on matters which may have legal implications for former directors and cannot be prejudicial to any individual," according to an Anglo Irish Bank spokeswoman. "The bank's indemnity cover has terms and conditions which, if breached, lead to cover being withdrawn."
Last week, FitzPatrick was arrested and questioned by members of the garda fraud squad over financial irregularities during his time with the bank.
Directors of public companies -- such as Anglo before it was nationalised -- are covered by a special insurance policy which pays their legal bills in the event of them being sued as a result of their employment with the company. It is understood that during the boom Irish banks had directors' indemnity policies worth close to €100m. Most of the bank director insurance policies are handled by the Dublin offices of Ace Europe, AIG and Chubb.
These director indemnity policies cost "in the high hundreds of thousands of euro", according to insurance sources, with the banks traditionally covering their executives annual premia. With increased responsibility on directors because of new regulations, most Irish companies now provide a form of director and officer indemnity cover for top executives. Details of these schemes are rarely disclosed.
Meanwhile, Anglo's drive to resume commercial activities still hinge around approval for its business plan from the European Commission. The bank's directors have submitted a strategy document positioning it as a small-business bank. Anglo sources even suggest that it would be poised to benefit from any future recovery in the Irish property market.
But the chances of a successful future have not met with universal enthusiasm. Last night, John Conroy, managing director of Merrion Stockbrokers, said that "commercially the bank has little to offer. Its future is a political decision".
But Stuart Draper of Dolmen Stockbrokers, an earlier sceptic about Anglo's prospects, is now more upbeat. "There is a layer of new guys in the bank whose agenda is to repackage the business, not just run down the book," he said. "Perhaps this is as a third banking force or as a rebranded bank. I think they may move out of their St Stephen's Green headquarters with its unhappy associations with the past and change the name of the bank."
Anglo is due to name several new directors imminently, but before their names can be announced they need approval from the Financial Regulator.