Sunday 17 December 2017

Brian Cowen in charge on night of bank guarantee, ex Minister Lenihan was doing running around – ex BoI boss

Brian Cowen and Brian Lenihan
Brian Cowen and Brian Lenihan
It is understood Mr Cowen will give evidence in July, but a number of other contributors, including key officials at the Department of Finance, could also throw more light on the subject

Ailish O'Hora and Clodagh Sheehy

FORMER Taoiseach Brian Cowen was in charge on the night of the bank guarantee, while ex Finance Minister Brian Lenihan was doing the running around, Bank of Ireland’s former boss Brian Goggin told the banking inquiry earlier today.

Mr Goggin left meetings in Government buildings at 3.30am on the night of September 2008, but he had been told at that stage that a blanket guarantee, for all banks including Anglo Irish Bank and Irish Nationwide, had been decided upon.

“The Taoiseach was chairing the meeting, he was in charge,” Mr Goggin, who was chief executive at Bank of Ireland from 2004 to 2009.

The now deceased Finance Minister was doing the running around, he added.

"It was a fairly fraught occasion, the entire day and night, it was the worst day in my life, it was incredibly stressful.

"The Taoiseach was at the top of the table but most of the interaction was with the Minister for Finance Brian Lenihan, the discussions, asking questions, etc," he added.

He said when asked what should be covered in the guarantee from Bank of Ireland's perspective, he said that senior creditors, junior dated creditors should be covered but not undated juniors.

Mr Goggin added that he and AIB executives had been asked on the night to get clearance to put forward €5bn each to boost Anglo.

(Earlier that day, Anglo Irish Bank had asked Bank of Ireland to acquire it - similar meetings had taken place with AIB later in the afternoon).

He said that AIB and Bank of Ireland executives had been together at all meetings in the run up to the guarantee except when they were in negotiations with their counterparts at each bank discussing the €5bn.

However, by the time they had gotten clearance to provide the funding, at 2am, they were told the decision had already been taken to guarantee all of the banks.

Mr Goggin’s recall of that night is in direct contrast to that of AIB.  He said there was “no ambiguity” by the end of the discussions that the government was putting in place a blanket guarantee for all six major banks.

AIB representatives have already told the inquiry they only found out the following morning in media reports that Anglo and Irish Nationwide banks were to be included.

Mr Goggin said he believed “yes AIB was with us at that point”  in the room when the blanket guarantee was confirmed.

That late night meeting was also attended by representatives of the Central Bank including John Hurley, the-then attorney general Paul Gallagher, the then Taoiseach and the then Minister for Finance, he said.

In the lead up to the night, Mr Goggin he had heard there had been lobbying  by bankers to have a guarantee in place for all institutions.

The nationalisation of Anglo and Irish Nationwide banks was “not a realistic prospect” on the night of the Bank Guarantee, he added.

Mr Goggin described how that night they had gone to Government buildings to make sure Mr Cowen and Mr Lenihan were aware of the gravity of the situation that Anglo was about to fail.

When they got there, he said, it was clear the Government was already aware of the problems.

By 3.30am when the discussions finished, Mr Goggin said his recollection was a decision had been made for a blanket guarantee including all six banks and there was “no ambiguity” about this.

Earlier that day, his bank had been requested by the Central Bank to consider taking over Irish Life and Permanent and this was in a scenario where Anglo and Irish Nationwide would fail and the other banks would be guaranteed.

That night, he added, the government was facing and “extremely difficult issue, in fact I think they had a dreadful predicament”.

Initially during the discussions on the night of September 29th 2008, he understood  Anglo and Irish Nationwide would be “dealt with” and the rest of the banks would be guaranteed but “it didn’t turn out that way”.

While nationalisation of the two seemed like the only possible option “to be quite blunt you don’t nationalise a significant bank in the middle of the week, you do it at the weekend.”

Mr Goggin stressed by the end of the night as his team left to go home he was in no doubt that a decision had been made for a blanket guarantee.

The former chief executive admitted that in the run up to the crash serious errors of strategic judgement were made by Bank of Ireland and “I am very sorry that this ultimately happened on my watch”.

Asked by Deputy Michael McGrath if the bank had “taken too much risk”, Mr Goggin said “we did”.

It was “cold comfort” that his bank was not as badly hit by the crisis as other banks and was “relatively better off”, he added.

Mr Goggin said the bank had made judgements on what they genuinely believed were solid ground.

Whether these judgements were good or bad there were “always made in a considered fashion and in good faith”.

He regretted that “the failure to anticipate the risk of a sharp reduction in property prices or the contraction of the wholesale money markets led to the requirement for assistance from the State”.

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