Former Anglo official ‘deeply regrets’ language and tone used in 2008 call

‘You get them to write a big cheque and they have to keep - they have to support their money’

Tue, Jun 25, 2013, 10:41

John Bowe, the former Anglo Irish Bank executive, has said he deeply regrets the language and tone he used in internal telephone calls recorded in the bank in 2008, just weeks before the Government guarantee.

Mr Bowe issued a statement this evening in response to the publication of the conversation or conversations he had with his Anglo colleague Peter Fitzgerald concerning the funding crisis confronting the bank at the time. He said the tone he used in the conversations was “imprudent and inappropriate”.

He categorically denied the allegation that he at any time misled the Central Bank or was aware of any strategy to do so.

Mr Fitzgerald, in a statement earlier todday, said he was not a member of the executive management board of Anglo in 2008 and was not involved in the discussions conducted by senior executive management with the authorities in 2008 in relation to the funding position of the bank.

“For the avoidance of doubt, I am not nor have I ever been aware of a strategy or intention on the part of Anglo Irish Bank to mislead the authorities in relation to the forecasted funding position of Anglo Irish Bank,” he said.

Mr Bowe said the phone call on September 18th, 2008, was in the wake of Lehman Brothers filing for bankruptcy and took place during a period of severe and unprecedented market dislocation.

“The Central Bank was receiving, at the time, detailed data from the bank on a daily basis in addition to short term cashflow projections. The Central Bank was also at that time conducting detailed and extensive due diligence on Anglo’s loan book through professional advisers engaged on their behalf.”

He said he was not on the executive management board of the bank in 2008 and was not a decision maker in relation to the negotiations with the Central Bank.

Earlier, Taoiseach Enda Kenny said he understands people’s “rage and anger” after the recording of two former Anglo Irish Bank executives discussing the bank’s bailout by the State emerged.

The two have denied misleading the Central Bank in the days preceding the 2008 bank guarantee about the amount of State support the institution would require.

In a recording published by the Irish Independent today, Mr Bowe and Peter FitzGerald, the bank’s then director of retail banking, are heard discussing liquidity issues at the bank around the time of the Lehman Brothers collapse.

Anglo Irish Bank told the Central Bank at the time that it would need some €7 billion in finance to stabilise itself, with the recording implying that staff already believed a larger sum would be needed.

The tape suggests the executives believed the authorities would have baulked if Anglo had said a higher sum was needed. The collapse of Anglo ultimately cost the State more than €29 billion.

The recording, from mid-September 2008, suggests they believed that once such a sizeable sum was committed by the authorities, further support would be forthcoming as the State would not want to risk losing its investment.

“The strategy here is you pull them in, you get them to write a big cheque and they have to keep - they have to support their money,” says Mr Bowe, in the recorded phonecall, of dealings with the authorities. “If it doesn’t look too big at the outset - if it looks big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you have a chance.”

Speaking in Dublin earlier, Mr Kenny said: “I understand the rage and the anger of so many people who have been affected by all of this in their daily lives”.

In a statement to The Irish Times, Mr FitzGerald said he was not a member of the Anglo executive management board in 2008 and “therefore was not involved in the discussions that were conducted by senior executive management of Anglo Irish Bank with the authorities in 2008” in relation to its funding position.

“For the avoidance of doubt, I am not nor have I ever been aware of a strategy or intention on the part of Anglo Irish Bank to mislead the authorities in relation to the forecasted funding position of Anglo Irish Bank,” he said.

RTÉ this morning reported Mr Bowe as having categorically denied the allegation that he participated in misleading the Central Bank September 2008.

In his statement, he told the broadcaster the talks with the Central Bank focused on obtaining funding for Anglo to allow it continue on an interim basis pending a more stable market, when the bank would be able to re-establish other funding sources and repay the emergency finance.

“We envisaged the relevant period of time to be a number of months before the bank would be able to access sufficient alternative funding,” he said.

Mr Bowe also pointed out that the phone call was three days after Lehman Brothers filed for bankruptcy, and therefore took place during a “period of severe and unprecedented market dislocation”.