Anglo said it would be the most profitable bank after guarantee

Draft plan claimed bank could overcome ‘issues’ caused by crisis, inquiry told

Anglo Irish Bank executives still believed after the 2008 bank guarantee that it would be Ireland’s most profitable bank – just two months before it was nationalised, according to files presented to the banking inquiry.

In November 2008, 12 executives in the bank worked on a draft business plan, still believing that they could overcome “the issues” caused by the banking crisis.

“We believe that Anglo Irish Bank will be the most profitable and capital generative of all publicly quoted financial institutions in Ireland over the five- year period,” they said.

The plan stated “In 2008, Anglo Irish Bank generated profits, after specific but before general provisions, of €1.3 billion.

“The Bank’s profitability and capital base have not been eroded by any material structured credit-related losses, which have been the key reason for capital destruction in the UK, European and global banking markets in 2007 and 2008.

“Difficult environments”

“This is because we do not engage in capital market or any high-risk trading activities,” it said.

“We expect, and are prepared for, very difficult recessionary economic environments over the next two to three years.

“Notwithstanding this, we are confident that given the nature of our business model and appropriate pricing and management of risk, the Bank will continue to generate strong profits and capital.”

Meanwhile, the then financial regulator Patrick Neary accepted the bank guarantee was a "throw of the dice", according to notes of a meeting in Government Buildings on the night the decision was made.

Records of meetings on the night of September 29th into the morning of September 30th, 2008, also show Mr Neary believed there was “value in the banks over time”.

The then taoiseach Brian Cowen said the guarantee was the "best way to underpin deposits", according to minutes prepared on the night.

Mr Cowen is also recorded as telling others to “go off and do it”.

The Oireachtas banking inquiry found that Department of the Taoiseach did not keep any minutes, but the records in question are contained in core department of finance documents.

“Rapidly deteriorating”

Richard Burrows

, then governor of the

Bank of Ireland

, is recorded as saying it could not be “guaranteed that any guarantee would work”..

“Situation threatens the stability of our organisations. Rumour in NYSE [New York Stock Exchange] that Dublin won’t go tomorrow. Contagion from weaker to strong. Two institutions in terminal decline.

“Eventually impartial guarantee should register as good among Centrals [sic] Banks around the world – language must be unmistakable.”

Eugene Sheehy, then chief executive of AIB, said: "People we have been dealing with for decades pulling back – [in] one month we will be funding bank overnight.

“Bad if we can’t get that, disaster – bankruptcy,” the records show him as saying. “Market is saying Anglo is bust.”

Mr Hurley stressed that the guarantee was needed in the morning and that Anglo was asking for €4 billion up front.

“Will give them €1.5 billion in the morning. Might be necessary tonight to call in the banks.

“Will have to be told that the use of the guarantee requires them to close down their businesses. If further funds required AIB & Bank should contribute,” he is quoted as saying.