Wednesday 20 November 2019

AIB did not want Anglo and Nationwide included in bank guarantee - ex chairman Gleeson

Clodagh Sheehy and Daniel McConnell

AIB sought a four-bank guarantee and did not want Anglo and Irish Nationwide included, former AIB chairman Dermot Gleeson has told the Banking Inquiry.

He said they wanted Anglo and Irish Nationwide “dealt with” separately from the other four banks, when asked about the controversial bank guarantee introduced on the night of September 29, 2008.

The then Governor of the Cental Bank, he said, requested AIB and Bank of Ireland provide €5bn each to carry on to the following weekend but this was never needed.

The blanket bank guarantee covered Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, which owns permanent tsb, Irish Nationwide Building Society and the EBS (Educational Building Society).

Mr Gleeson, a former Attorney General, who was present on the night of the Bank Guarantee, said events that night “have sometimes been misrepresented.”

The decision to make the so called “blanket guarantee” to six banks  “was not discussed with or raised with, or by, the representatives of AIB - or as far as I know, Bank of Ireland - on September 29.

“The purpose of the meeting which the representatives of AIB and BOI requested with the government, was to discuss the dramatically deteriorating international situation, the apparently dire straits in which Anglo found itself, and the possible repercussions of that fact for BOI and AIB.

Mr Gleeson stressed that the Banks “expressed the view that Anglo and Irish Nationwide needed to be decisively dealt with by the State in some way.”

In the context of those two banks being decommission​ed ​in some way that a guarantee would then be provided for the remaining banks “to protect them against the turmoil which would inevitably from an Irish bank being either liquidated or nationalised”.

They had “learnt that Anglo could not open  the next morning and had run out of liquidity” he said.​

​"​The Governor of the Central Bank stated during the meeting that it could be ‘disorderly’ or ‘there could be a fumble’ if Anglo were dealt with midweek​.

"​So what was needed was for AIB and BOI to try and provide €5bn each in liquidity to support Anglo until the coming weekend” explained Mr Gleeson.

Most of the evening was spent in efforts by BOI and AIB to assemble enough liquidity to keep Anglo going until the weekend.

“That effort was successful and by morning, €10bn in liquidity had been assembled, with its repayment 7 days later to be underwritten by the Government.” he added.

Mr Gleeson is the first senior banker to appear before the Inquiry.​

Mr Gleeson today apologised to the Irish people for his part in the banking crash.

Mr Gleeson told the Banking Inquiry he wished to “express sincere regret for these events”

He ​confessed​ his bank had lent to much to individual developers.

 “There were decisions made in AIB which made things worse than they need have been for Irish citizens, for shareholders and employees and for my part in those events I offer my sincere apologies.”



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