FitzPatrick loans reached as high as €129 million

ANGLO Irish Bank informed shareholders yesterday that the value of loans to former chairman Sean FitzPatrick reached as high as €129 million in the last couple of years.

Mr FitzPatrick currently owes the bank €84m. His loans will be detailed in full, for the first time in eight years, in the bank’s upcoming annual report — for the year to the end of September, 2008 — which is provisionally due before the end of this month, but which may be delayed until next month.

As the loans were “hidden” from Anglo’s shareholders — by being moved to the Irish Nationwide Building Society — the stated amounts in the last few annual reports were significantly lower than the full loan amounts.

In Anglo’s 2006 annual report, it was stated that loans of €8m were served to Mr FitzPatrick, while in reality he owed the company €56m. In the 2007 annual report, €7m worth of loans were detailed to shareholders, while in reality, Mr FitzPatrick’s liabilities had risen to €129m. His current outstanding loans total €84m, according to Anglo’s management and were used to invest in property funds, pension investments and to purchase shares in a range of publicly quoted companies — including Anglo, itself.

In addition, Anglo confirmed yesterday that the value of loans to current directors of the bank, amount to €23m. The total value of directors’ loans — including Mr FitzPatrick’s — currently amount to €179m.

“These events have been traumatic and painful for shareholders and staff and they raised a crisis of confidence, impacting all stakeholders,” said new Anglo chairman Donal O’Connor.

“We are really sorry that this happened,” he added.

Although speculation has been rife to the contrary, Mr O’Connor added that according to advice from Anglo’s own lawyers — Matheson Ormsby Prentice — nothing illegal had taken place.

Elsewhere yesterday, the European Commission said that it will be looking at the nationalisation plan to see if there are any elements that break its rules on state aid.

In a statement, the EC said that it had been informed by Finance Minister Brian Lenihan as to his plans and said that it is “completely neutral on the nationalisation itself”.

However, it added: “The Commission is in the process of assessing whether or not there may be elements of state aid in the terms and conditions of the nationalisation transaction.”

Meanwhile, although the head of Anglo’s British lending division Declan Quilligan is widely being tipped as the bank’s new chief executive, the new candidate will not be named until after the nationalisation legislation is passed in the Dáil. The Government has already stated that it will assemble a new board, but has indicated that a certain level of continuity would be beneficial. Shareholders, yesterday, repeatedly called for the majority of the board to resign.