Monday 11 December 2017

Lenihan left furious after Nationwide tries to exploit guarantee

Joe Brennan

Finance Minister Brian Lenihan was so angered by an attempt by Irish Nationwide to exploit the banking guarantee to generate business in the UK that he warned the society could be blocked from the scheme.

Communications between Department of Finance officials on October 3, 2008 -- just days after the guarantee was struck -- show Mr Lenihan was asked to comment by the 'Financial Times' on an email sent by the son of Irish Nationwide boss Michael Fingleton (pictured right) seeking deposit business in Britain.

One official wrote that Mr Lenihan said he would refer the matter to the Financial Regulator, according to the documents released under the Freedom of Information Act.

"Also, he stated that he had not yet entered into any contract with any of the institutions (possibly said: and such matters may make him decide not to)," the official wrote.

Irish Nationwide was forced to apologise that night for the email, written by Michael Fingleton jr.

Among other released documentation is a joint letter -- dated October 1, 2008, and marked 'secret' -- from the then-bosses of Allied Irish Banks and Bank of Ireland, lobbying the Government not to set too high a fee for the guarantee scheme.

The letter, from Eugene Sheehy and Brian Goggin to Finance Department secretary general David Doyle, said: "An unreasonable high premium would threaten the viability of even the strongest institutions."

It added: "Therefore, it is vital that the quantum of the premium to be paid would not be such as to concern in the equity and/or debt markets, thereby potentially destabilising the entire banking system."

Fine Gael finance spokesman Richard Bruton said the letter was evidence that the banks were trying to force the Government to give them a sweetheart deal. Documents also contain a letter from Dan Mulhall, director general of the EU division of the Department of Foreign Affairs, to Ireland's ambassadors, calling on them to arrange calls with the finance ministries of their host countries to clarify why the guarantee was brought in.

"The reported reaction to the Government's decision to guarantee deposits in the Irish banking sector across the EU has not proven as supportive as we would wish," he wrote.

Irish Independent

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