Bank guarantee night data indicated shorter plan

‘Solvent’ as it pertained to status of covered banks was removed from final official statement

Kevin Cardiff: “I told the Taoiseach, in a side conversation, that if we accepted their wording, ‘the banks would be laughing at us’, or words to that effect.”

Kevin Cardiff: “I told the Taoiseach, in a side conversation, that if we accepted their wording, ‘the banks would be laughing at us’, or words to that effect.”

 

Draft Central Bank documents prepared before AIB and Bank of Ireland joined the “guarantee night” talks pointed to a shorter, narrower scheme than provided by the eventual guarantee, the inquiry found.

Noting that top figures from AIB and BoI had arranged to meet then taoiseach Brian Cowen in Government Buildings at 9.30pm that night, the inquiry said there were conflicting views as to whether the banks provided their own written guarantee proposals.

“A draft press release announcing a six-month bank guarantee had been prepared by the Central Bank prior to 21:10 on the night of the guarantee. The draft release only covered deposits and interbank lending,” the inquiry found.

The guarantee as agreed was much broader in its scope – covering both subordinated and senior bonds – and was for a two-year duration.

Extension

The committee said Kevin Cardiff, then a senior official in the Department of Finance, recollected how the banks had sought a longer guarantee.

In his statement, Mr Cardiff said he was asked to produce drafts of the final announcement “based on” the banks’ wording. “I believed that this wording was broader in a number of respects than had been understood by the official parties, and I told the Taoiseach, in a side conversation, that if we accepted their wording, ‘the banks would be laughing at us’, or words to that effect,” he said.

“The Taoiseach immediately asked me to ensure the draft reflected the understanding of the official parties as to the decision taken, rather than the banks’ draft.”

Solvent

“Much has been written and said about how the terms and scope of the guarantee were arrived at. Again the absence of any documentation or formal minutes means that the detail of evidence offered on the terms and scope relies largely on memory.”