‘So, [the loan] is bridged, until we can pay you back . . . which is never’
Banker laughs at making repayments and mimics voice of Financial Regulator
The Anglo Irish Bank headquarters on St Stephen’s Green. Photograph: Niall Carson/PA Wire
The most striking aspect of the September 2008 taped conversation between two Anglo Irish Bank executives, published yesterday, is the tone. In the conversation, head of capital markets John Bowe is telling director of retail banking Peter Fitzgerald about a visit Bowe and others had made to the Central Bank in which they had informed officials that Anglo was running out of money and needed €7 billion in public funding.
The taped conversation is peppered with outbreaks of laughter. Bowe’s almost light-hearted tone when saying that the money being looked for was designed to get the Central Bank on the hook, after which it would be easier to get more public support, which most likely would be required, is the most striking fact articulated by the banker on the tape.
Fitzgerald, whose retail banking arm needed to fund withdrawals that were taking place at an alarming rate, asked where the €7 billion figure came from. Bowe responds: “Just, as Drummer [chief executive David Drumm] would say, picked it out of my arse, you know.”
He later goes on to say that the bank is facing a liquidity problem (ie it has cash-flow problems) and needs money to buy time. “And that number is seven [€7 billion]. But the reality is that actually we need more than that. But you know, 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, you know?”
Fitzgerald: “Yeah, yeah, yeah. They’ve got skin in the game and that’s the key.”
Bowe said that if the Central Bank knew the “enormity of it upfront, they might decide, they might decide they have a choice. You know what I mean? They might say the cost to the taxpayer is too high. But 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 I think you have a chance. So I think it can creep up.”
That senior bankers dealing with a crisis that was threatening the wellbeing of a whole country were speaking in such terms is striking in itself.
But what is almost equally striking about the tapes occurs when Bowe tells Fitzgerald about what happened when the then financial regulator, Patrick Neary, joined the meeting.
At this stage, according to Bowe, he had just given the officials his view of the prospective catastrophe facing the Irish economy. If Anglo got into difficulty, he said, it had more than 100,000 lump-sum Irish depositors. “And I said, ‘Take it that the other Irish banks will not be able to raise any wholesale funding . . .’ ”