Friday 13th February 2009:The Board of Irish Life & Permanent plc met last evening to discuss transactions which took place during 2008 between companies in the Group and Anglo Irish Bank.
It was noted that the Financial Regulator had communicated to the Non Executive Directors of the Board in person last May that it was a policy objective of both the Central Bank and the Financial Regulator that Irish financial institutions would work to support each other in the face of an unprecedented threat to the stability of the Irish financial system arising from the international credit crisis.
However, the Board has expressed its strong disapproval of and disappointment with some of the specific measures used to support Anglo Irish Bank during 2008 and the fact that the Board itself was not informed of the specific manner in which such support had been afforded to Anglo Irish Bank.
The Board accepted with sadness the resignation of Group Finance Director, Peter Fitzpatrick, who was the longest serving Director. The Board wishes to acknowledge that throughout his career with the Group, Mr. Fitzpatrick had always acted with the utmost integrity and professionalism.
Furthermore the Board acknowledged that in respect of this matter, the only motivation was to provide support for the broader financial services sector in accordance with his understanding of the expressed wish of the Financial Regulator and the Central Bank.
The Board also accepted with regret the resignation of the Head of Group Treasury, David Gantly. The Board acknowledged the extremely high level of integrity and professionalism shown by Mr. Gantly throughout his service with the company and fully accepts and recognises that he too had acted in line with his genuine understanding of the express wishes of the Regulatory Authorities in attempting to provide support for the wider financial sector in Ireland at a critical time in the economic life of the country and its financial system.
The Board declined an offer of resignation by Group Chief Executive Denis Casey.
David McCarthy, Chief Financial Officer, has been appointed by the Board as Group Finance Director to replace Peter Fitzpatrick – subject to regulatory approval.
The Chairman of the Board, Gillian Bowler, said that while it was clear that the only motivation of the individuals concerned was to support the policy objective of the Financial Regulator and the Central Bank, the manner in which specific support was advanced to Anglo Irish Bank during 2008 had been wrong; "I have absolutely no doubt about the integrity of the individuals concerned. However in providing support to the broader financial infrastructure, mistakes were made – for which I and the Board apologise unreservedly."
The Chairman also confirmed that the Board has initiated a full review of its processes and procedures to ensure that these events can not arise again.
Additional Financial Information:
In the interests of clarity, Irish Life & Permanent plc (IL&P) is making disclosure of the nature and extent of the Group's dealings with Anglo Irish Bank (Anglo) across each institution's reporting dates. We emphasise again that each of these transactions was properly accounted for in the Group's [Irish Life & Permanent plc] books and records and were fully disclosed in our regular reports and returns to the Financial Regulator.
Deposits lodged with Anglo Irish Bank:
On 31st March 2008, at the request of Anglo, IL&P, through its subsidiary Irish Life Assurance (ILA), deposited €750 million overnight on receipt of €1 billion cash into Permanent TSB which was offered as collateral in respect of the deposit.
During September, at the request of Anglo, IL&P, through its subsidiary ILA, deposited a total of €3.45 billion with Anglo in 5 separate deposits [on dates from 26th September to the 29th September] accepting €3.45 billion of cash into Permanent TSB which was offered as collateral in respect of these deposits.
These transactions matured on the 2nd and 3rd October.
On the 29th September, IL&P was contacted by Anglo on three separate occasions requesting further advances which were declined as further collateral was unavailable from Anglo to support such deposits.
On 30th September, following the introduction of the Government Guarantee Scheme, and again at the request of Anglo, IL&P, through its subsidiary ILA, agreed to place a total of €4 billion on deposit overnight with Anglo on receipt of €4 billion into Permanent TSB which was offered as collateral in respect of these deposits. This transaction occurred in four tranches.
These transactions matured on the 1st October.
IL&P plc:
As part of IL&Ps ongoing wholesale funding programme, the bank enters into normal secured interbank transactions of short term duration with a number of participants including the ECB. In accordance with market norms, these involve the pledging of eligible mortgage assets in exchange for cash with the transactions being accounted for as interbank deposits.
At 30th June 2008 IL&P had outstanding €7.73 billion of such transactions. Anglo's participation in these transactions amounted to €3.33 billion.
These transactions were correctly accounted for as interbank deposits in the interim accounts of IL&P.
There were no material collateralised transactions with Anglo at 31st December 2008.