Banking Inquiry: ‘All banks solvent on guarantee night’

Former financial regulator Patrick Neary still believes all banks were “solvent” on the night of the bank guarantee, despite admitting that his repeat of the view in an infamous Prime Time interview three days later was “optimistic”.

Mr Neary retired months after the crash on a €134,000 annual pension and €630,000 lump sum.

At the banking inquiry yesterday, as politicians spent eight hours attempting to uncover what caused the crisis, Mr Neary repeatedly blamed other groups for the failure to identify hidden problems before it was too late.

Throughout an afternoon session focusing on the night of the bank guarantee, Mr Neary insisted that despite serious issues emerging in the months before the deal, he believed all institutions were solvent on September 29, 2008. He claimed that he told politicians this on the night in question.

“I didn’t believe any institution was insolvent,” he said, confirming this was “based on the response of the institutions”.

“There was no evidence of a solvency issue.”

Mr Neary said the only options on the table were either to nationalise Anglo Irish Bank and guarantee all other firms or issue a blanket guarantee, and that he believed AIB and Bank of Ireland wanted the latter.

Three days later, on October 2, 2008, Mr Neary insisted in a Prime Time interview that Irish banks were the best capitalised in Europe and entirely safe.

Sinn Féin finance spokesman Pearse Doherty asked how this claim was made when, days later, two banks needed €10bn in State re-capitalisation and, 70 days later, Anglo Irish Bank was nationalised.

Mr Doherty said the re-capitalisation request was “not far off into the future, it was within days” and questioned how the financial regulator — who “knew better than anybody in the State what was going on under the bonnet” — could have misjudged so badly.

After similar concerns were raised by Fianna Fáil finance spokesman Michael McGrath and Fine Gael TD Kieran O Donnell, Mr Neary said: “I think in hindsight that assessment was optimistic. I made that statement in good faith.”

He was also grilled over meeting with senior bankers socially, including a round of golf with ex-Anglo Irish Bank chairman Seán FitzPatrick and director Willie McAteer in 2003.

Responding to questions about three times he met the officials for “golf, dinner, and drinks”, Mr Neary said TDs were “overhyping” as it was “maybe coffee and a sandwich” and “always with approval”.

Mr Neary denied that his retirement months after the bank guarantee was due to external pressure, although he confirmed that “I felt my position was going to be difficult” as he was “vilified”.

He rejected claims his departure was because he failed to do his job, saying it was instead linked to “a matter related to the courts” — a comment that cites ongoing Anglo Irish Bank court hearings. “I’m on dangerous ground here chairman, can we leave it at that,” he said.

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