‘Irish Times’ article raises questions over reserves at Anglo
Drumm says it is ‘appalling’ and ‘unbelievable’
Anglo’s former headquarters on Stephen’s Green, Dublin.
David Drumm, the then chief executive of Anglo Irish Bank, blamed reporting by The Irish Times for Anglo’s financial difficulties which was causing a run on the bank.
He singled out an article by reporters David Labanyi and Simon Carswell on June 19th, 2008 for causing €80 million to leave the bank in one day.
The article said that a research note to investors by Keefe, Bruyette Woods Ltd (KBW) said Bank of Ireland and Anglo Irish Bank had lower tier 1 capital, a measure of financial strength, than most European banks.
It said Ireland was among the countries that would need to raise the most new capital under Basel II, which aimed to modernise capital rules to make bank lending and their balance sheets more sensitive to risk.
KBW said that when geographic and macro risks to rating downgrades and lower collateral prices are assessed alongside low core tier 1 ratios, Bank of Ireland appears to be one of the banks most at risk from rating downgrades and lower collateral prices.
Mr Drumm called the journalism in question “sloppy and highly expensive to us” and added “that is appalling – these guys are unbelievable”.
Following the article, the financial regulator called Anglo to inquire about their Tier 1 capital, the most important measure of the bank’s ability to keep going, which they surmise only happened because of the article. Drumm then says the regulator “is now regulating through the good offices of The Irish Times”.