Drumm’s placing of blame on blanket guarantee is self-serving and downplays bankers’ culpability
Analysis: key issue for any inquiry is how AIB tried to compete with Anglo for business in property sector
David Drumm argues that a misleading picture is being created by the Anglo recordings as they do not include conversations he and other Anglo executives had with the Financial Regulator, the Department of Finance and the Central Bank. Photograph: Bryan O’Brien
The latest snippets of conversation from the “Anglo tapes” over the weekend widened the range of characters and topics in the affair.
They also served to reinforce the impression of arrogance and recklessness the tapes have created. They reinforced another impression also: that what, with hindsight, has become evident to the public in the time since the crash, was evident at the time to those at the heart of the system.
It was common currency before the banking crisis to wonder about the position held by Michael Fingleton in Irish Nationwide. The controversial banker was deemed to be akin to a sole trader who got to run his own financial institution. This was well-known in journalistic and political circles, and an extract from the tapes published in the Sunday Independent yesterday makes clear that the same view was common in the financial sector.
Relative to its size, Irish Nationwide has had the most spectacular collapse of all the Irish financial institutions.
In a conversation in the wake of the 2008 bank guarantee, Anglo executive John Bowe discussed Fingleton with an unidentified English fund manager, who viewed Nationwide as the “weakest link” in the Irish financial sector, and worried whether, if something bad happened, the effect could spread to other institutions.
The fund manager said he had met with Nationwide’s management and wondered at their level of understanding. Bowe was momentarily confused by the mention of Nationwide’s management. Nationwide had a very strong chief executive (Fingleton), he said, and “it is difficult to see what the management team is beyond that”. At the time, Fingleton was in his early 70s.
Source of amusement
In the event, both Anglo and Nationwide were put into the State-owned Irish Bank Resolution Corporation, which is now in liquidation. In another excerpt from 2008, Anglo chief financial officer Matt Moran is recorded joking with Bowe about Anglo bringing “governance” to Nationwide if the two were merged. At the time Anglo was hiding directors’ loans from its shareholders, among other dubious practices.
There is also mention on the tapes of AIB, the financial institution that has cost the exchequer the most in absolute terms. During a March 2008 conversation, Bowe and Drumm discussed how Irish banks’ share prices were doing badly. Drumm said the Bank of Ireland was concerned it was doing less well than AIB. Bowe told his chief executive: “They think that Allied have played fast and loose with lending money to every cowboy in town – apart from ourselves also lending money to every cowboy in town. They think they’ve been the sensible bankers and the market just doesn’t get it.”