Saturday 16 December 2017

Anglo Irish Bank 'ran out of money to make normal daily payments', court told

Left to right, William McAteer, Denis Casey, John Bowe, and Peter Fitzpatrick
Left to right, William McAteer, Denis Casey, John Bowe, and Peter Fitzpatrick

Eimear Cotter

ANGLO Irish Bank had difficulty completing "back to back transactions" with Irish Life & Permanent so to allow the pretence the bank had €7.2 billion more in customer deposits than it had because it had run out of money to make its normal daily payments, a jury has heard.

Anglo's former Director of Treasury, Matt Cullen, was giving evidence on the second day of the trial of former Anglo executives John Bowe (52), from Glasnevin, Dublin, and William McAteer (65), of Greenrath, Tipperary town, Co Tipperary; and former Irish Life and Permanent executives Denis Casey (56), of Raheny, and Peter Fitzpatrick (63), of Malahide, both Dublin.

They have denied conspiring to mislead existing and potential investors, lenders and depositors by engaging in transactions between Anglo Irish Bank, Irish Life and Permanent (IL&P) and Irish Life Assurance to make Anglo appear €7.2bn better off than it was.

Mr Cullen said the executive directors of the bank were aware of the purpose of the transactions and he assumed the board was also aware.

The court heard the scheme involved money being transferred by Anglo to IL&P. It would then be put back on deposit with Anglo by Irish Life Assurance so it would appear in Anglo's accounts as a corporate deposit.

In his evidence this morning, Mr Cullen told Dublin Circuit Criminal Court that Anglo discovered after close of business on September 29, 2008 it would not have enough funding to make its payment schedule the following day.

He said the bank managed to secure emergency funding of "€1.2 bn or €1.3bn or €1.4bn" from the Central Bank so it could make its payments on September 30.

He said the Central Bank was not informed of Anglo's plans to complete "€6 or €7 billion" in transactions with IL&P.

Mr Cullen said the bank guarantee scheme was introduced that night and on September 30, 2008 "billions, three or four billion was coming in" to Anglo.

On September 25, 2008, Mr Cullen said it was planned that Stg 900 million would be transferred from Anglo Isle of Man to IL&P and then back to Anglo, through Irish Life Assurance.

Mr Cullen said this money was to be on deposit in Anglo for only a few days, but it "had to be over the year end".

He said he spoke to Ciaran McArdle, who had been directed to complete the transaction, and he told him he'd "done so much and couldn't do any more".

He said he informed Mr Bowe about how much had been done and it was decided they'd try again the next day.

Mr Cullen said he couldn't recall if the Stg 900 million transaction was completed on September 26 or September 27.

He said the transactions continued on September 29, 2008 and it was to be done "in €1 bn lots". He said market conditions were extremely tough and for the first time ever Anglo blocked the system, as it didn't have enough money.

Mr Cullen said funds came into the market later on September 29 and Anglo was able to make its payments, but was unable to do the "tranches of €1 bn".

He said that shortly after close of business on September 29 Anglo realised it would not have enough to make its payment schedule for the following day.

Mr Cullen said it secured emergency funding from the Central Bank, and then the bank guarantee was introduced that night.

He said this was "extremely positive right across the Irish market", and while he was unsure of the exact deposit figure he said "billions, three or four billion was coming in" to Anglo.

He said he spoke to Mr Bowe and asked him if the IL&P transactions were still being done, and he was told they were still doing it, and about "€6 €7 billion" was "still the target".

He said he did not have any direct knowledge that the Anglo board was told about the transactions.

The jury has now been sent home until Monday.

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