Tuesday 12 December 2017

'Stop lending and brush up on their f**king German'

REVEALED: What David Drumm said Anglo staff should do as bank came under pressure

WARNING SIGNS: David Drumm, main, discussed with John Bowe, above, how Anglo was coming under pressure as early as November 2007.
WARNING SIGNS: David Drumm, main, discussed with John Bowe, above, how Anglo was coming under pressure as early as November 2007.

Tom Lyons and  Gavin Sheridan

ANGLO Irish Bank boss David Drumm told senior executives as early as November 2007 that staff needed to stop lending and "brush up on their fuckin' German".

The former chief executive made the comments a full year before the then government's infamous blanket bank guarantee – and as Anglo was preparing to announce record-breaking profits.

In the latest Anglo Tapes obtained by the Sunday Independent, Mr Drumm is heard discussing with Anglo's Head of Treasury, John Bowe, how the bank was coming under severe pressure as the global financial crisis deepened.

Mr Bowe is clearly worried about how long the crisis will last – and whether the bank can continue its barn-storming lending.

Mr Drumm asks Mr Bowe if they should tell Declan Quilligan, another Anglo executive, to "just shut down the fuckin' loans. Just don't do any". He suggested staff could be temporarily reassigned to non-lending roles.

"Let the lads just tidy up their files and fucking help out with future bond issues and what have you, and fucking just brush up on their fuckin' German," Mr Drumm says. "Just, eh, right now lending isn't the game."

Mr Drumm does not explain exactly why Anglo employees would need to learn German. But it is likely he was referring to the fact that the ailing bank would need European Central Bank – which is based in Frankfurt – support to stay afloat.

In another foul-mouthed tirade, Mr Drumm then discusses the best way to convince the board of the bank to shut off the lending taps without telling ordinary staff, who he refers to as "the children".

"We should have that fucking debate, not in front of the children [ordinary employees] by the way," Mr Drumm tells Mr Bowe.

"Now is the hour. If we agree that now, and there will be push back on that . . . They [the board] will be too conservative, too negative but I am with you, this [the financial crisis] could go on and on."

As elsewhere in the Anglo Tapes, Mr Bowe appears far more prescient in his views of the looming financial meltdown than either the government or the regulators.

"Capital markets were moving nicely and recovering slowly and now they're taking a step right back," he says. "Equity markets are killing us. Debt markets are . . . ugly. I am being a bit negative now. It certainly looks blacker than it did."

But Mr Drumm is slightly more optimistic. "I think there is a way to contextualise that. We are certainly not saying 'Yeah it is going well. Is it holding? No, on balance it is a bit tighter. Are we coping? Yeah and we'll explain why'."

Mr Bowe admits that Anglo is already beginning to crack under the pressure. "There is only a finite amount of time we can keep going the way we are going," he says.

"We don't have collateral we can pledge, loans we can turn into covered bonds . . . we are living on short-term fixes at the moment."

The recognition by two of Anglo's most senior bankers of the imminent crisis was in stark contrast to the position of the then Fianna Fail government.

Around the same time, Taoiseach Bertie Ahern was awarded a €38,000 pay rise, taking his annual salary to more than €300,000, comfortably eclipsing that of global leaders such as then President George W Bush and Germany's Angela Merkel.

Mr Ahern was also spending much of this time squabbling with a State tribunal about various "dig-outs" from assorted business people.

Irish Independent

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