How the Government decided

TAOISEACH Brian Cowen, sat down at midnight, Tokyo time, to chair a cabinet meeting over the phone to Dublin when the final decision on the first nationalisation of an Irish bank was made.

He would have been aware before he left for Japan on Monday that such a situation might arise during the week.

Ever since the re-capitalisation of three Irish banks was announced in the days before Christmas, the Government had been “closely monitoring” the situation at Anglo Irish Bank.

Brian Cowen and Finance Minister Brian Lenihan had discussed the situation before he left and were in contact on the issue every day while the Taoiseach was at the trade mission in Japan.

On Wednesday night, Mr Lenihan met with a number of economists from the Economic and Social Research Institute (ESRI) for two hours.

The meeting was on “the broader issue” of the banking system according to a spokesperson for the Department of Finance but it’s believed the issue of Anglo did arise.

“The Government decision was kept to a very small group, it couldn’t have signalled this was occurring,” said the spokesperson.

Ministers were contacted on Thursday morning and called to a cabinet meeting at that afternoon. Following the meeting, Mr Lenihan told EU Competition Commissioner Neelie Kroes of the plan.

A press conference was called at the Department of Finance at 8pm.

Mr Lenihan said there was no “run on the bank” and “no systemic outflow of funds” that prompted the Government’s action.

Anglo were due to hold an Extraordinary General Meeting (EGM) on Friday morning to discuss the Government’s proposal for a €1.5bn re-capitalisation.

Mr Cowen said: “We had a situation where if we didn’t make our move, you would have at the EGM the €1.5bn offer being made. We decided that would not now be on the table in respect of the EGM.”