‘Orphan’ Depfa Bank had aid request denied, FoI records show
Released documents say German bank was not covered by Irish or German authorities
Patrick Honohan told the Oireachtas banking inquiry that a request for help from Depfa Bank was turned down during the height of the financial crisis.
Central Bank governor Patrick Honohan told the Oireachtas banking inquiry on Thursday that Irish authorities were approached for aid from a large German bank in the IFSC at the height of the financial crisis.
Mr Honohan said Depfa’s request for assistance was rightly turned down.
Documents released to The Irish Times under Freedom of Information (FoI) show Depfa’s asset-covered-securities (ACS) bank being described as an “orphan” because it was neither covered by the German authorities nor the Irish Government through the guarantee.
Depfa ACS Bank is a subsidiary of Depfa plc.
The Government’s then-secretary general, Dermot McCarthy, was emailed by then-Irish Banking Federation (IBF) chief executive Pat Farrell on October 15th, 2008.
“We need your support on this - IFSC banking has been completely overlooked,” Mr Farrell told Mr McCarthy.
Released Depfa Bank documents
An email to the Department of Finance secretary general at the time, Kevin Cardiff, from the banking federation said: “[WE] urgently request some statement of political support as per the German example”.
The Dublin-based Depfa Bank and its parent survived a liquidity crisis following the collapse of Lehmann Brothers thanks to a €124 billion package of loans and guarantees made available by the federal government in Berlin and by German private banks.
The FoI documents include a contemporaneous note by Mr McCarthy of a phonecall from Depfa.
Mr McCarthy noted Depfa ACS was “perceived as an ‘orphan’” because it was neither covered by the German authorities nor the Irish Government through the guarantee.
“They were urging the guarantee scheme to be extended to cover issuers of asset-covered securities operating within the Irish legislation,” he wrote.
“Specifically this would cover Depfa ACS Bank plc (and not Depfa plc)”.
He noted the bank employed over 300 people in Dublin.
“By extension, the exclusion of this large operation is seen as an indication that the Irish authorities are not committed to the future of the IFSC, being concerned solely with domestic retail operations.”
Mr McCarthy concluded his note by saying he explained he would bring their concerns and request to the attention of relevant colleagues in the Department of Finance.