Kenny Faces Irish Bank Inquiry Calls as Anglo Tapes Released
Irish Prime Minister Enda Kenny faced growing calls for an inquiry into the collapse of Anglo Irish Bank Corp. after the Irish Independent released recordings of talks between executives as the lender sought a bailout.
The partial transcripts from September 2008 indicate the then-executives planned to seek an initial 7 billion euros ($9.2 billion) from the central bank because a commitment that size would make the authorities unwilling to let the lender later fail, the newspaper reported.
Anglo Irish’s strategy was to “pull them in,” John Bowe, head of capital markets, told consumer banking head Peter Fitzgerald, according to the newspaper. “You get them to write a big cheque and they have to keep, they have to support their money,” the Irish Independent cited him as saying.
The tapes prompted both of the largest opposition political parties to call for an inquiry into the collapse of the financial system, which cost the country its economic sovereignty. Ireland spent about 30 billion euros rescuing Dublin-based Anglo Irish, almost the 64 billion euros the state has committed to bail out the banking industry.
“We need to get to the full truth about the way that bank was run and the level of knowledge the bank’s executives had about its true financial position in September 2008,” said Michael McGrath, finance spokesman of Fianna Fail, the ruling party at the time of Anglo Irish’s bailout.
The tapes “raise questions about the picture Anglo Irish was painting about its finances at the time” of its rescue, said Pearse Doherty, finance spokesman for Sinn Fein, Ireland’s second-largest opposition party. “This injects momentum into the need for a full banking inquiry.”
Kenny told reporters in Dublin today that the government is working on laws to allow such probes in future. Legislation should be enacted before parliament adjourns for its summer break, planned before the end of July.
“I understand the rage and the anger of so many people who have been affected by all of this,” Kenny said. The government will make a decision on an inquiry in “due course,” he added.
The conversations suggest the executives suspected that the lender would struggle to repay all of the money provided by the central bank, the Irish Independent said. Both Bowe and Fitzgerald denied any wrongdoing today.
“I am not nor have I ever been aware of a strategy or intention on the part of Anglo Irish Bank to mislead the authorities in relation to the forecasted funding position,” Fitzgerald said in a statement issued by his lawyer.
In a statement to state broadcaster RTE today, Bowe denied that he was, directly or indirectly, a participant in misleading the central bank in September 2008. Bowe said the talks with the central bank focused on getting funding for Anglo Irish to allow it to continue on an interim basis until conditions stabilized.
“We envisaged the relevant period of time to be a number of months before the bank would be able to access sufficient alternative funding,” Bowe said in the statement. He didn’t respond to two e-mailed requests from Bloomberg for comment.
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