IBF lobbied government to include German bank Depfa in guarantee

The former head of the Irish Banking Federation (IBF) lobbied the government to include German bank Depfa in the blanket bank guarantee in October 2008.

The Oireachtas banking inquiry yesterday heard evidence from Pat Farrell, who was chief executive of the IBF from mid-2004 to June 2013.

The committee heard Mr Farrell sent an email to Dermot McCarthy, then secretary general of the department of the taoiseach, on October 15th, 2008, seeking to have Depfa included in the guarantee.

“We need your support on this,” Mr Farrell said in the email, which followed a representation to the department of finance on the previous day.

The guarantee for Irish banks was introduced by the government on September 30th, 2008.

Depfa had its head office in the IFSC in Dublin and was a member of the IBF.

Mr Farrell said the guarantee was intended for domestic Irish banks, a situation that did not sit well with foreign-owned banks operating in Ireland.

“They were quite annoyed,” he said. “They felt that they were being placed at a disadvantage, so they ventilated their concerns to me quite robustly.”

He said Depfa was for a short period of time seen as an “orphan” in regulatory terms, because it was not clear whether it fell within the ambit of the authorities here or in Germany.

Absolute obligation

“That was the context for the note to Dermot McCarthy,” he said.

Mr Farrell said the IBF had an “absolute obligation to represent our members’ interests” and to advocate their position to the relevant authorities.

“Our job is to convey that view,” he said.

Mr Farrell later told Sinn Féin’s Pearse Doherty: “I got a representation from Depfa that I passed on to the relevant authorities, no more no less.”

He rejected Mr Doherty’s assertion that he had lobbied on behalf of Depfa to be included in the guarantee.

“You say I lobbied, I say I passed on representation,” he said. “I saw it as a representation.”

Senator Seán Barrett said that if Depfa had been included in the guarantee, the bailout of the banking sector by Irish taxpayers would have amounted to €197 billion and not the €64 billion relating to AIB, Anglo Irish Bank, Bank of Ireland, EBS, Irish Life & Permanent and Irish Nationwide.

“Aren’t you lucky that the secretary of the department of the taoiseach didn’t accept your representation?” Mr Barrett asked.

Extending guarantee

“I would doubt that there was any intention at any stage by the authorities here in Ireland, for a moment, to actually contemplate extending the guarantee to those liabilities,” Mr Farrell replied.

He told the Senator he didn’t have a “detailed understanding of what the potential liabilities were that they [Depfa] were asking to be guaranteed”.

The former IBF chief, who is now head of group communications at Bank of Ireland, accepted the federation’s hosting of a dinner to mark the retirement of Brian Patterson as chairman of the financial regulator “probably wasn’t the best decision I ever made”, given that it took place just two months after the guarantee.

He said it was a case of “damned if you do and damned if you don’t”.

“The dinner happened,” he said. “It was a two-hour affair. It was a pretty sober affair because it was during the working week. There were no speeches.

“There was certainly no business transacted at it. Understandably . . . the optics of it were far from good. That’s the background to it. It’s as straightforward as that.”

Mr Farrell spent one sitting day as a Senator during Albert Reynolds’s time as taoiseach. Mr Doherty said this conferred privileges on him in terms of access to Leinster House and asked how important this was during his time with the IBF.

“Well, it wasn’t unfettered because I think all of you . . . will know me here and they will know I wasn’t in the business of wandering around the corridors of Leinster House.

“I came to Leinster House by appointment, or when I had a reason to be here, where I had been summoned by an Oireachtas committee or where I had official business.”