Monday 16 December 2019

Former Anglo banker says loan sign-off 'retrospective'

David Drumm denies conspiring to defraud. Photo: Collins Courts
David Drumm denies conspiring to defraud. Photo: Collins Courts
Andrew Phelan

Andrew Phelan

A former Anglo Irish Bank executive has said he was asked to sign off on a €7.2bn inter-bank loan after it had happened, which was outside the usual procedures.

Mike Nurse said he "retrospectively" signed off on a credit limit for the transaction during the 2008 financial crisis, after a team of bankers reporting to CEO David Drumm had already approved it.

Mr Nurse, then head of Anglo's Treasury Risk division was giving evidence in the trial of Mr Drumm at Dublin Circuit Criminal Court yesterday.

Mr Drumm (51) has pleaded not guilty to conspiring to defraud Anglo investors in 2008 by dishonestly creating the impression that the bank's deposits were €7.2bn larger than they were.

Mr Drumm also denies false accounting, by providing misleading information to the market.

The case centres on circular multi-billion euro inter-bank transactions between Anglo and Irish Life and Permanent (ILP), routed through Irish Life Assurance (ILA).

The money was placed back in Anglo and treated as customer deposits, which are considered a better measure of a bank's strength.

Mr Nurse told Mary Rose Gearty SC, prosecuting, there were two "a", or senior level, and two "b" level signatures needed on sign-off on changes in the credit limit for inter-bank transactions. Mr Nurse was an "a" signatory, as was Tony O'Hanlon.

There was also a fast-track credit approval process that only required one "a" signature, which would be ratified later.

Mr Nurse said he was not aware that Anglo had placed the first €1bn with ILP until the day it happened - March 31, 2008.

The credit limit was €200m, so the €1bn placement was 400pc in excess.

This was signed as approved by Mr Nurse and Mr O'Hanlon.

However, the €7.2bn ILP transaction in September was dealt with at executive management level and by the treasury team who were involved.

The ILP credit limit was then €500m, so the excess was more than €6.7bn.

The signatories on the morning of October 1 were Mr Nurse and finance director Willie McAteer.

The trial continues.

Irish Independent

Editor's Choice

Also in Irish News