STATE-OWNED Anglo Irish Bank last year agreed to lend €950 million to Irish Life & Permanent (IL&P) against bonds backed by its mortgages “to acknowledge past assistance” from the company, according to internal bank e-mails.
The loans were not related to the controversial €7.45 billion deposits from IL&P into Anglo Irish over the end of its financial year to September 30th, 2008.
Anglo agreed to lend IL&P the €950 million to help the company reduce its level of borrowing from the European Central Bank (ECB) as part of IL&P’s securitisation programme in April 2008.
A manager in Anglo’s credit risk management section, Mike Nurse, raised the transaction in an e-mail to then finance director Willie McAteer, then chief financial officer Matt Moran and director of treasury John Bowe on April 29th.
He told Anglo’s senior managers that the transaction was for a month but it “may be repeated at maturity if it suits the two parties” and to check with him if they had any questions or comments.
“The motivation for IL&P is to reduce its reliance on ECB repo funding,” Mr Nurse said. “The motivation for Anglo is to acknowledge past assistance from the counterpart and to position us for future potential arrangements.
“The desk is looking to close this transaction today,” he said.
A spokesman for Anglo said the bank rolled over the one-month facility with IL&P until it matured on July 3rd, 2008.
The transaction was part of inter-banking lending arrangements with IL&P disclosed by the bank when it made a public statement on the €7.45 billion deposits.
Anglo claimed the €7.45 billion were customer deposits from IL&P subsidiary Irish Life Assurance. IL&P maintained they were back-to-back inter-bank deposits.
An IL&P spokesman said the €950 million transaction was part of normal inter-bank funding arrangements similar to arrangements reached with other Irish financial institutions during 2008.
Mr Nurse declined to comment on any Anglo-IL&P transactions.
Mr McAteer left the bank last January, while Mr Moran announced his intention to leave the bank earlier this month.
The bank has said that Mr Bowe will assume a leadership position within Anglo’s financial markets division when former National Australia Bank executive Jim Bradley takes over as head of financial markets early in the new year.
RTÉ’s Prime Times Investigates programme reported last night that Peter Fitzpatrick, finance director of IL&P, made a note of a conversation that he had with a high-ranking official at the Central Bank showing that the regulatory authorities were aware of the €7.5 billion deposits into Anglo.
In the note, Mr Fitzpatrick says that a month following the transfer, an official contacted him to confirm that Irish Life had provided “a significant amount of support to Anglo on September 30”, the programme reported.
Mr Fitzpatrick, who was forced to resign over the transactions, maintains he responded that IL&P had given more than originally anticipated, believing that it was supporting Anglo in a manner encouraged by the Financial Regulator and Central Bank under the so-called “green jersey agency” to support other Irish banks.
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