Regulator did not formally clear €169m loan to Quinn

THE €169 million loan from Anglo Irish Bank to fund Seán Quinn’s 15% purchase of its shares in 2008, which is the subject of a criminal investigation, was not formally approved by the Financial Regulator.

It is understood that after Anglo agreed the loan with Quinn, the Financial Regulator subsequently instructed the bank to deduct the amount of the loan from its capital base.

In the letter the regulator said “it considers it appropriate that Anglo take a deduction from Total Own Funds for the full amount of €169m for solvency purposes until such time as this facility is refinanced”.

The letter continued: “It is noted that it is expected to take between two to three weeks before the requisite structures are in place to facilitate the refinancing of this amount.”

A spokeswoman for the regulator refused to comment yesterday on the grounds that the loan was the subject of a criminal investigation.

Anglo sanctioned the loan to the Quinn Group to finance the purchase of the bank’s shares in July 2008.

Seán Quinn and his family have lost close to €3 billion since the banking collapse, the bulk of it on his gamble on Anglo.

The €169m loan is part of the €2.8bn owed by Quinn and his family to the now state-owned bank.

Anglo provided the loan to Quinn as he came under pressure to unwind contracts for difference held in Anglo’s shares, which amounted to 28% at one point during the banking boom.

His gamble on the shares came at a time when the bank was seriously exposed to the property sector.

And its subsequent share price collapse has crippled the Quinn empire, which ranges from hotels to general insurance.

It is understood that the letter, which has not been formally published, does not explicitly sanction the loan but that it demanded that Anglo deduct the amount in question from its balance sheet.

The other 10% of the family’s remaining indirect interest in Anglo’s shares was sold to 10 Anglo customers, known as the Golden Circle, in a deal managed and financed by the bank itself to support its own share price at a time of market volatility.

That scheme is under scrutiny by the Garda Bureau of Fraud Investigation as well as by the Director of Corporate Enforcement.


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