FG slams €9.5m paid to departing directors

FINE GAEL last night said it was wrong that €9.5m was paid to the same Anglo Irish directors who had brought the bank to its knees.

The party also criticised the Government for releasing a heavily-edited version of the PricewaterhouseCooper audit of Anglo, saying the coalition’s tactics “did not inspire confidence”.

Party finance spokesman Richard Bruton was reacting to the publication of the two documents on Anglo — the bank’s annual report and the audit of the bank conducted by PwC.

The annual report revealed that €9.5m in remuneration was shared between just 10 people, all of whom were directors or former directors of the bank.

Two of the 10 accounted for over half the sum, with former chief executive David Drumm being paid €2.1m last year and retired director Tom Browne receiving €3.9m, of which €3.75m was a golden handshake in recognition of his “contribution to the group”.

Mr Bruton predicted public fury would grow over the size of the remuneration packages.

“The €9.5m payments to the same Anglo Irish directors who brought the bank to its knees, with the taxpayer picking up the tab, will only add to public fury about the banking crisis and the Government’s handling of it,” he said.

“These directors drove the bank into the wall, but can now sit back and watch taxpayers pick up the bill.”

Reacting subsequently to the Government’s publication of the edited PwC audit summary at 9.15pm last night, Mr Bruton accused the coalition of “secrecy and delaying tactics”.

“The significant delay by the Government in releasing the heavily-edited PricewaterhouseCooper report on Anglo Irish Bank, and its secretive approach throughout, do nothing to inspire confidence in the Government’s handling of this crisis.”

Labour finance spokeswoman Joan Burton, meanwhile, criticised the lack of detail in the Anglo annual report, saying it was merely “a work in progress”.

The public was no wiser as to the nature of the golden circle deal, she said. The report should also have spelled out exactly which directors had received multi-million euro loans from the bank, she added.

Sinn Féin MEP Mary Lou McDonald, speaking at the party’s ard fheis in Dublin, said the golden circle had to be “named and shamed”.

“They are not heroes,” she added, contradicting businessman Ulick McEvaddy’s claim earlier in the day. “There was no patriotism in their actions.”

The MEP said economic recovery would not be possible until the banks were fixed. The first step in this process had to be “a clear-out of the higher echelon of bankers.”

Ms McDonald added: “This means sacking the bankers, not retirement with golden handshakes.”

She also called for the investigations of Anglo and other banking institutions to be referred to the Director of Public Prosecutions.

Coalition partner the Green Party said it would ensure all necessary steps were taken to uncover any wrongdoing in the banks.

Summary of the report

The summary of the PricewaterhouseCooper report into Anglo Irish Bank revealed an institution that pitched its future on a small number of large investors and developers.

The report said the viability of these developers is in jeopardy because of cash flow problems. It said their fates are reliant on the prospects for shopping and residential schemes, many concentrated in north and south west Dublin.

The report makes for sobering reading on prospects for the developers who stoked the economic boom and questions the chances of these figures repaying the hefty debts which are now due to taxpayers.

* “There are potentially substantial exposures to a number of key customers.”

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* 26% of its Irish loan book was tied to the top 20 regulated investment groups.

“There has been [Sept 27] a €5 billion deterioration in corporate deposits and €440 million deterioration in retail deposits in the last week.”

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* In the week before the week before the Bank Guarantee scheme a flood of money left the bank compounding €10bn of deposits it lost.

* These annual impairment charges [loan defaults] are expected to be €2.3bn and €3bn for 2009 and 2010 respectively under the worst of two scenarios.

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* “Anglo has built up strong relationships with its key customers. Management state that this strategy of developing deep relationships with what it deems to be the strongest operators is deliberate.”

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* “The Bank has a number of very large exposures with approximately 15 relationships in excess of €500 million. The size of these exposures increases the risk profile of the Bank.”

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* “We understand from management that a number of the Bank’s larger customers are experiencing short term cashflow difficulties at present and are in the process of disposing of non-core and in some cases trading assets.”

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* “There are a number of customers which are not currently on the Bank’s watch, notable or impairment lists all of whom exhibit potentially serious short term liquidity issues.

“Management have confirmed that the September notable/watch/impairment lists have been updated to include these customers.”

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* The report questioned if its high value customers involved in retail and development deals would be able to repay loans.

“The Anglo model is dependent on customers’ ability to successfully refinance significant development and investment loan portfolios in the short to medium term. “This is exacerbated where (i) Anglo is the lead bank in a wider syndicated loan or (ii) significant additional debt funding would be required for the successful completion [of land banks held by key customers].”

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* “The retail trade is struggling and if the difficult economic conditions continue into the medium term, shopping centres and retail developments may begin to experience trading difficulties or not be developed.

“A number of Anglo’s customers have significant exposures to the retail sector [particularly in Dublin] with Retail Investment and Retail Development loans accounting for 16% and 4% of the Bank’s loan book respectively.”

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* “We have seen significant evidence of borrowers reacting to the downturn in the residential market by effectively ‘mothballing’ development sites and land banks.

“These sites are not expected to be developed/completed until there is a return in activity to the market. It will be difficult for the Bank to permit interest roll up on [loan repayments] where interest cannot be funded and further security is unavailable.”

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