Anglo CEO David Drumm inquired about ‘bloating’ its balance sheet

The former chief executive of Anglo Irish Bank, David Drumm, asked about "bloating" the bank's balance sheet with short term inter-bank loans in 2008, a court has heard.

The trial of four bankers accused of taking part in an alleged market deception scheme also heard references by one of the accused, John Bowe (52) to "rinky dink deals".

Four former executives from Anglo and Irish Life & Permanent (ILP) are on trial for allegedly conspiring to mislead investors by setting up a €7.2 billion circular transaction scheme to bolster Anglo’s balance sheet.

Mr Bowe from Glasnevin, Dublin; Willie McAteer (65) of Greenrath, Tipperary Town, Co Tipperary; Denis Casey (56), from Raheny, Dublin; and Peter Fitzpatrick (63) of Convent Lane, Portmarnock, Dublin have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions between March 1st and September 30th, 2008.

On day 62, the 13-strong jury listened to taped telephone calls involving Mr Drumm speaking, in what counsel called “fairly colourful terms”, to Mr Bowe, Anglo’s head of capital markets at the time. The calls were played as part of the evidence of Mr Bowe’s cautioned interviews made to investigators from the Garda Bureau of Fraud Investigation in June 2012.

In a discussion in September 2008 about the bank’s upcoming end of year accounts, Mr Drumm told Mr Bowe to “just leave the rating agency aside for a minute because that’s just a complete f*****g n***** in the woodpile”.

Mr Drumm asks Mr Bowe: “Do we have to cash back that?” if they got “six billion” from ILP?

Asked about this telephone call, Mr Bowe told gardaí­ it might be a loose use of terminology and Mr Drumm may have been questioning if the bank had the money to place with ILP.

He agreed that it “clearly” showed a relationship between Anglo’s deposits with ILP and Irish Life’s deposit back with Anglo.

Elsewhere in the tapes, Mr Drumm tells Mr Bowe that the “bigger picture” is that on September 30th “even with the six billion fixes which Mr f*****g Denis [Casey] confirmed for me this morning....we’re f****d”.

Mr Bowe replied: “We’re still in a hole.”

Mr Drumm later tells him: “We have to get a get out of jail card before December 3rd. Unless we can fix the poxy balance sheet over year end, which is next weekend, which to me just does not look doable.”

He adds: “If we pop up with that balance sheet, it’s curtains”.

Mr Drumm later asked Mr Bowe how Anglo would collateralise the loans from ILP and the accused replied: “It’s done as a cash deal. So the money just goes into him but he pays it back.”

Mr Drumm then asked: “Are you going to be able to bloat the balance sheet...over year end with short term inter-bank and all that sort of stuff and shove it into liquidity?” He talked about the bank surviving the next few weeks.

In another taped telephone call, Mr Bowe asked his treasury colleague Ciaran McArdle in March 2008 about “rinky dink deals”.

In interview, Mr Bowe told Det Sgt Michael McKenna that this was a reference to transactions designed to support the customers deposit number. He said it wasn’t a financial term.

Asked if he agreed the term suggested “dodgy deals”, Mr Bowe said: “No I wouldn’t agree. If I wanted to convey dodgy, I would have said dodgy.”

He said he had heard the phrase used to describe deposits which are “a little bit different”.

The trial continues before Judge Martin Nolan and a jury.