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Ex-Anglo Irish Banker Sang Praises of State and German Money

Ex-Anglo Irish Executive Sang Praises of State and German Money
A file photo shows a workman removing the Anglo Irish Bank Corp. logo from the bank's former headquarters in Dublin on April 20, 2011. Photographer: Aidan Crawley/Bloomberg

A former executive at Anglo Irish Bank Corp. said it would be “fantastic” if the state took over the lender, as “we’d all get to keep our jobs” and sang ‘Deutschland ueber alles’ as the bank won German deposits, according to tapes of 2008 conversations released today.

John Bowe, former head of capital markets, spoke in conversation to two other executives in September and October 2008, three months before the government took over the bank, the Irish Independent, which released the tapes said. The recordings indicated the lender 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 it fail. Bowe, who left the bank in 2012, said the bank probably needed more to avert a collapse.

“I deeply regret that the language and tone I used in these internal bilateral telephone calls was both imprudent and inappropriate,” Bowe said in an e-mailed statement. “I categorically deny the allegation that I, at any time, misled the Central Bank or was aware of any strategy to do so.”

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. Prime Minister Enda Kenny told lawmakers today in Dublin that the government will hold a parliamentary inquiry into wider banking crisis, as the leaked tapes dominated the Irish media.

Bank Guarantee

“I’m going after” reckless bankers, Kenny told lawmakers. He said that a parliamentary inquiry needs to “get at the truth” which “led to that culture culminating in a bank guarantee which has been reflected in its condensing, arrogant and dismissive way by extracts from tapes.”

At one point, Bowe sings ‘Deutschland ueber alles’ a line of the German national anthem that isn’t sung anymore after the regime used it to glorify Germany in the 1930s and 1940s, in response to comments by another executive that he is using the state guarantee of the banking system to win funds in Germany.

The executives laugh off concerns by the country’s regulator on how the guarantee was viewed outside Ireland. Alistair Darling, who was the U.K.’s Chancellor of the Exchequer at the time of the guarantee, said Ireland’s decision to cover its banks smacked of panic rather than a plan, according to his memoirs, published in September 2011.

Ireland guaranteed its banks’ deposits and debts on Sept. 30, 2008 in a bid to calm investor concern after banking shares in Dublin fell by more than a quarter the previous day.

Don’t Pump

On one call, Bowe tells the other executive that he has instructed his staff not to “overtly pump it so that somebody can quote you” even as the lender “wants to get liquidity ratios up.”

The conversations also suggested that the executives suspected that the lender would have difficulty repaying some of the liquidity granted by the central bank.

“So it is bridged until we can pay you back which is never,” Bowe said. “It has to happen because if it doesn’t happen we’re going to hit a wall in the next week.”

In all, the bank cost the state about 30 billion euros to save, and is in the process of being liquidated after the state took it over in 2009.

The revelations may complicate Ireland’s efforts to win a refund from Europe of some of the 64 billion euros the state spent on saving the banking system, Deputy Prime Minister Eamon Gilmore said today.

“It’s quite clear there was an attitude, a couldn’t-care-less attitude, which is demonstrated by what’s come out on these tapes,” Gilmore told reporters in Luxembourg.

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