Anglo banker unease at fast-tracking of credit limit increases

David Drumm fraud trial hears of concern at sanctioning of €6.7bn jump in Irish Life & Permanent credit exposure

Former Anglo Irish Bank chief executive David Drumm (51), with an address in Skerries, Co Dublin, arrives at the Dublin Circuit Criminal Court where he is charged with conspiracy to defraud. Photograph:  Collins Courts.

Former Anglo Irish Bank chief executive David Drumm (51), with an address in Skerries, Co Dublin, arrives at the Dublin Circuit Criminal Court where he is charged with conspiracy to defraud. Photograph: Collins Courts.

 

A former senior banker at Anglo Irish Bank has told a jury that the practice of fast-tracking the approval of credit limits at the bank was not normal.

Tony O’Hanlon, who was head of credit at Anglo, told David Drumm’s conspiracy to defraud trial at Dublin Circuit Criminal Court that he had concerns about the way the bank was run.

The witness said he was unable to sign off on a €6.7 billion credit increase for Irish Life & Permanent in September 2008 as he could not authorise it retrospectively.

David Drumm (51) of Skerries, Co Dublin, has pleaded not guilty to conspiring with former bank officials Denis Casey, William McAteer, John Bowe and others to defraud depositors and investors at Anglo by “dishonestly” creating the impression that deposits in 2008 were €7.2 billion larger than they were.

The former Anglo Irish chief executive has also pleaded not guilty to false accounting on December 3rd, 2008, by furnishing information to the market that Anglo’s 2008 deposits were €7.2 billion larger than they were.

On Wednesday, Mr O’Hanlon told Sinéad McGrath, prosecuting, that he received an email on September 29th, 2008 from Mike Nurse, head of risk at Anglo. Mr Nurse instructed Mr O’Hanlon not to include IL&P’s name in the daily interbank excess report that he distributed to other members of staff at Anglo.

“It’s very unusual, I have never seen anything like this in my banking background,” Mr O’Hanlon told Ms McGrath.

The jury viewed an email sent to Mr O’Hanlon by a colleague on October 1st, 2008. It stated that IL&P’s credit limit was €500 million but its exposure was €7.2 billion, exceeding this limit by €6.7 billion.

Ms McGrath asked Mr O’Hanlon if he was asked to sign off on this credit increase. The witness said he had “no ability” to do so retrospectively and therefore could not.

During cross examination, Mr O’Hanlon agreed with Brendan Grehan SC, defending, that credit increases that took place at Anglo were “often ‘on the corridor’ type of conversations”. He also agreed that, regarding IL&P’s credit increase, the paperwork did not quite keep up with what happened.

“The fast-track approach in Anglo was just not normal in a banking environment,” Mr O’Hanlon told the jury.

Mr Grehan put it to the witness that he had not seen any emails from him to colleagues in 2008, outlining his concerns.

“I had concerns about the way this bank was run, I had concerns about their systems, their policies, their procedures,” Mr O’Hanlon said.

“I suggest you’re showing hindsight, as this is not in your statement,” Mr Grehan said.

Mr Drumm accepts that multimillion euro transactions took place between Anglo and Irish Life & Permanent in 2008 but disputes that they were fraudulent or dishonest.

The trial, which is now in its twelfth week, continues before Judge Karen O’Connor and a jury of 10 men and four women.