Wednesday 21 February 2018

Now we know Drumm wanted to burn Anglo bondholders for €9bn

Paul Williams

ANGLO Irish Bank CEO David Drumm was planning to burn bondholders for nearly €9bn as part of a last-ditch plan to save the bank, the latest Anglo Tapes investigation reveals.

According to material in the possession of the Irish Independent, Mr Drumm instructed director of treasury John Bowe to get ready for a huge, cost-saving 'bond buyback' just four days before he was forced to resign his position at the toxic bank.

Mr Drumm wanted everything in place to 'burn' bondholders by offering to buy some of the bank's debts on the markets at 50 cent in the euro.

He told Mr Bowe: "We're ready to hit the road. . . get your ducks in a row".

The plan was to slash Anglo's huge debts by offering lenders in the bond market half the value of their bonds in cash up front if they were prepared to write off the balance of the debt.

Mr Drumm said: "I put in a, a sort of an outline capital building plan on Saturday to yer man (former Department of Finance secretary general Kevin Cardiff).

"We'll buy back bonds. . . the target level will be 50pc and we'd release 80 basis points of f**king capital and, em, or 70 or 80, and I said, then the rest is a fully underwritten rights issue – underwritten by you (the Department of Finance)."

The action on bonds was to be one part of a radical plan to fix the bust bank's balance sheet. Success also rested on getting the Government to write a €2bn cheque that would be sunk into the bank.

Mr Drumm told the recently promoted Mr Bowe he believed he had the backing of the department and the Financial Regulator.

"No, this is totally in the system with the Central Bank . . . and the Department of Finance. And quite formally with them.

"So for you to go to the Central Bank, or wherever you have to go, to get approval, that will not be news to them at all. And you'll just be seen to be doing what I said we would do.

"If they (the Department of Finance) start jerking you around on getting these approvals, then I need to know about that," Mr Drumm insisted.

This call was recorded on December 15, 2008, as the Government grappled with a renewed crisis after the September 30 bank guarantee failed to restore confidence.

Mr Drumm's earlier buccaneering style was on the wane. The tone of the call suggests officials were gaining ever more power over him as the crisis at the bank deepened.

He complained bitterly about a senior figure at the Department of Finance – thought to have been Kevin Cardiff – who was making him jump through various hoops as part of a negotiations for an injection of tax payers' funds into the bank.

He told Mr Bowe: "If we give up, em . . . they'll blame us for giving up . . . and then it's just an excuse for them to f***ing hammer us. It's just, it's awful, but that's. . . So the best you can do is just keep a momentum, a forward momentum as best you can."

Irish Independent

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