Anglo Irish Bank could not rely on pillar banks for aid, witness claims

Trader says at trial of four senior bankers accused of misleading investors that he had good relationship with peers at Irish Life & Permanent during crisis period

Witness Ciaran McArdle, a dealer with Anglo’s group trading department, arrives at the Dublin Circuit Criminal Court to continue giving evidence in the trial of four former bankers  who are accused of conspiring to mislead investors by using interbank loans to make Anglo Irish appear €7.2 billion more valuable. Photograph: Collins Courts.

Witness Ciaran McArdle, a dealer with Anglo’s group trading department, arrives at the Dublin Circuit Criminal Court to continue giving evidence in the trial of four former bankers who are accused of conspiring to mislead investors by using interbank loans to make Anglo Irish appear €7.2 billion more valuable. Photograph: Collins Courts.

 

A dealer with Anglo Irish Bank has told the trial of four senior bankers that the bank could not rely on the State’s pillar banks to come to its aid during the financial crisis.

Four men, including Anglo’s former head of finance Willie McAteer (65) and John Bowe (52), who had been Anglo’s head of capital markets, are accused of conspiring to mislead investors by using interbank loans to make Anglo Irish appear €7.2 billion more valuable than it was.

The interbank loans allegedly involved money being transferred by Anglo to Irish Life and Permanent (IL&P) and then being put back on deposit with Anglo Irish via IL&P’s life assurance division.

The transfer would allegedly appear as corporate deposits and not an interbank loan so the bank’s corporate funding figure would appear bigger for the bank’s year-end figures on September 30th, 2008.

Peter Fitzpatrick (63), former director of finance at Irish Life and Permanent (IL&P) and the lender’s former chief executive Denis Casey (56) from Raheny, Dublin, Mr McAteer of Greenrath, Tipperary Town, Co. Tipperary and Mr Bowe, from Glasnevin 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.

Prosecution witness Ciaran McArdle, who was a dealer with Anglo’s group trading department, said it was a tough time to work at Anglo and there was huge stress on the retail section of the bank which fielded 20,000 phone calls from customers concerned about their deposits around this time.

He agreed that one of the worries within the bank was that hedge funds would hire a “rent-a-crowd” to queue outside Anglo to give an impression of a run on the bank, further destabilising its share price.

He said that at the start of the liquidity crisis, it was the Central Bank’s preference for Irish banks to help each other out.

Mr McArdle agreed with Michael Bowman SC, representing Mr Fitzpatrick, that this was referred to as the “green jersey agenda” and that the phrase “charity begins at home” was used.

Mr McArdle agreed that Anglo couldn’t rely on international banks for help in increasing their balance sheet and couldn’t even rely on some domestic banks such as Bank of Ireland and AIB.

The witness said he had a good personal relationship with his counterpart in IL&P. He said he also had good relationships on a personal level with his counterparts in the pillar banks but that Anglo “couldn’t rely on them to come to our aid.”

Counsel put it to Mr McArdle that he used “uncharitable language” about Bank of Ireland in a phone call during the period.

Counsel read from the transcript quoting Mr McArdle: “If we were to ask Bank of Ireland, it would have to go through 47,000 people only to be told to f**k off.”

Judge Martin Nolan commented “that’s a nice way of putting it” and the witness asked with surprise “did I say that?”. The trial continues before Judge Nolan and a jury.