Tuesday 21 November 2017

Gleeson paid €900k for shares weeks before crisis

Former AIB chairman's bank stock splurge now worth just €168,000

Jerome Reilly

Jerome Reilly

Former AIB chairman Dermot Gleeson invested more than €920,000 in bank shares less than two weeks before he attended the late-night crisis summit at Government Buildings that led to the rescue of Irish banks.

Mr Gleeson bought 150,000 shares in AIB in a frenetic three-day plunge into the market in September 2008.

The former Attorney General bought 50,000 shares on September 17, 2008, priced at €6.47p per share, documents seen by the Sunday Independent reveal.

The following day, on September 18, he purchased a further 50,000 shares at €5.73p

Then, on September 19, he entered the market again, buying another 50,000 shares at €6.25p

The total cost of the three trades came to just over €920,000. The value of the 150,000 shares last Friday stands at €168,000.

According to Allied Irish Banks' Register of Director and Secretary's interests, on September 19, 2008, Mr Gleeson held a total 350,000 shares in the financial institution.

But 10 days later, on the night of September 29, 2008, AIB chairman Mr Gleeson, AIB chief executive Eugene Sheehy, along with Bank of Ireland chief executive Brian Goggin and BoI chairman Richard Burrows met Finance Minister Brian Lenihan after Irish banking shares experienced their worst day's trading in their history.

It was after a series of meetings that night that the Government came to the decision they would guarantee all the liabilities -- the customer and interbank deposits, and also the vast majority of bonds -- of the six Irish banks.

By the following May, Mr Gleeson was addressing the AIB extraordinary general meeting at AIB Bankcentre, Ballsbridge, Dublin, at which he announced he would be standing down as chairman in July 2009.

During his speech, Mr Gleeson said he was acutely aware of the anger and disappointment among shareholders and of the hardships brought about by the fall in share price and the temporary cessation of dividend payments.

"Over the past 12 months we have witnessed extraordinary volatility in financial markets and economies worldwide, the consequences of which are being felt by everyone, everywhere."

"However, aside from the impacts of the world recession, decisions were made in Ireland and here in AIB which have compounded the effects of the worst economic downturn in living memory."

"In common with the European and US banking systems, in common with our customers, Irish people and businesses, and in common with the Irish state, we believed the momentum in world economies, including Ireland, would continue for some time, and would slow gently, rather than abruptly," Mr Gleeson told shareholders.

"Regrettably, we were wrong in that view. With hindsight, I regret some of the lending decisions that were made, particularly in relation to property development here in Ireland," he added.

Last week, it was revealed that Mr Gleeson, who was one of the top lawyers in the country before he decided to concentrate on his business interests, was involved in two substantial commercial property investments in 2006 when the Celtic Tiger boom was at its zenith.

Mr Gleeson was part of a partnership that bought property at the corner of Dawson Street and Duke Street, Dublin, in December 2006, for €20m. The property includes the building currently occupied by Carluccio's restaurant.

Mr Gleeson was also part of a partnership that bought Brooklawn House, an office building on Shelbourne Road, Ballsbridge for €47m in April 2006.

Sunday Independent

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