Drumm claimed Merrill wanted Anglo nationalised immediately

The last government allegedly went against advice from Merrill Lynch to nationalise Anglo Irish Bank immediately, according to media reports today.

In recordings of telephone conversations between former chief executive David Drumm and another Anglo executive in December 2008, Mr Drumm claims Merrill Lynch had "signed a death warrant" for the "basket case" bank and wanted it nationalised immediately.

In a phone conversation with Anglo colleague John Bowe, Mr Drumm claimed he had been told of Merrill Lynch's advice by Alan Dukes, who had been recently appointed by the government to Anglo's board.

When contacted today Mr Dukes said he “no comment to make” on Mr Drumm’s assertion that they discussed the matter and added “you’ll have to ask people who were in government at the time” for details on the advice provided by Merrill.

Documents relating to advice from Merrill Lynch in the run up to the introduction of the bank guarantee in September 2008 have been published by the Public Accounts Committee.

In them the advisers outlined a range of options, including the nationalisation of Anglo and Irish Nationwide Building Society.

However, the advisers stated that a guarantee, covering subordinated debt holders as well, was the “best/most decisive/most impactful from market perspective”.

Merrill also considered but discounted the option of allowing a bank to fail because of the impact on other Irish banks.

A spokeswoman for Merrill declined to comment today on whether it provided advice to the government after the introduction of the guarantee.

In the recordings Mr Drumm can also be heard outlining a plan to burn bondholders at the bank in a bid to rescue the troubled institution and save it up to €9 billion.

“We’re ready to hit the road . . . get your ducks in a row,” he told Mr Bowe in the account of the tapes published today by the Irish Independent.

The conversation took place only days before Mr Drumm left his position as chief executive at the bank on December 19th, 2008.

The cost of nationalising Anglo Irish Bank has topped €30 billion.

Fine Gael TD Dara Murphy said the decision to ignore Merrill Lynch’s advice and immediately nationalise the lender was further proof of the cosy relationship that existed between Fianna Fáil, developers and Anglo.

"Despite these clear warnings about the ill-health of the toxic institution, Brian Cowen and Fianna Fáil pressed ahead and hoodwinked the nation, putting the burden of Anglo and their developer friends' debts firmly on the shoulders of the Irish people," he said.

“The tapes today confirm what we have suspected all along; that Fianna Fáil was firmly wedded to Anglo and was willing to save the bank at any cost. There are still so many questions that remain unanswered in terms of who knew what, who met who and how and why decisions were taken.”

Mr Murphy called for a public Oireachtas inquiry to be conducted in a “timely manner”.

Yesterday Taoiseach Enda Kenny called on senior figures who know the truth behind the Anglo Irish Bank debacle to “stand by” the Republic and come forth with the information they hold.

Speaking on RTE Radio One this morning, Fianna Fáil TD Billy Kelleher denied the tape recordings, from December 2008, contradicted previous claims that the then-government had acted on bad advice over the rescue of the banking system.

“Prior to the guarantee itself in September, Merrill Lynch did outline a number of options, but this particular tape relates to December 2008, a number of months after the guarantee itself,” he said.

"We're now taking David Drumm as a star witness, only a couple of days ago he was the most reviled figure in Ireland. "

Labour deputy leader Joan Burton said people in the country want to hear the full story from everybody who was involved, and said there was a high level of denial from Fianna Fáil over the incident.

“Whether Fianna Fail like it or not... they actually were the government and they were the key decision makers who took whatever advice or whatever information they had.

She said if a Dáil inquiry was set up to investigate the matter, she would back the committee being supported by senior legal and accountancy experts.

The content and tone of the conversations in the tapes have drawn widespread condemnation, with German chancellor Angela Merkel saying yesterday she had “nothing but contempt” for the sentiments expressed.

In an interview with German newspaper Frankfurter Allgemeine Zeitung, Central Bank governor Patrick Honohan said the attitude and content of the calls were "offensive" and "embarrassing" for the country.