‘To cut a long story short, we sort of said: Look, we need €7bn’

The 11-minute recording is of a telephone conversation between two senior members of Anglo’s management, John Bowe, head of capital markets, and Peter Fitzgerald, director of retail banking, on Sept 18, 2008.

Bowe briefs Fitzgerald on a meeting the previous evening between representatives from Anglo, the Central Bank and the financial regulator.

Anglo was in financial crisis and told the meeting it needed a €7bn emergency loan from the State to tide it over until its position stabilised. The recording reveals that the bank knew it would need more than this but kept the figure lower so as not to scare off the Central Bank. It also reveals that the bank knew it was unlikely its position would ever stabilise.

The tactic decided upon was that once the Central Bank was invested in Anglo, it would need to keep providing more money to protect its investment. The recording reveals that there was never any intention of repaying the so-called loan and the expectation was Anglo would be broken up and sold in parts or nationalised.

From Bowe’s account, the Central Bank and regulator were surprised by the scale of the crisis and the size of the loan sought, and insisted whatever funds were provided to Anglo it had to sort out its problems without the bank coming back looking for more.

Anglo did not actually get the €7bn in emergency funding as events overtook the request. The Government announced a blanket bank guarantee two weeks later and Anglo was nationalised three months after that. Sorting out Anglo has cost the State €34bn.

What is clear from the recording, however, is that Anglo deceived the Central Bank and regulator about the outlook for the bank and the extent of the bailout it needed, and that the Central Bank and regulator were caught off guard by the escalating crisis at Anglo and were too ready to accept the bank’s version of events.

Q. Who initiated the call?

A. Peter Fitzgerald called John Bowe although Bowe said he was just calling Fitzgerald, and joked that Fitzgerald must be “therapeutic”, meaning telepathic.

Q. Why was it taped?

A. In line with bank policy at the time, all external and internal phone calls were recorded.

Q. Given the joke at the start of the conversation, was it a formal briefing or a casual chat?

A. Both. The tone is jocular at times, there is laughter and crude language and Bowe mimicked the shocked reactions of officials he met the previous night in a jokey fashion. But Fitzgerald, while joining in the laughter, pushed for details of the meeting and likely outcomes for Anglo and seemed intent on getting a clear picture of what was going on.

Q. What were the key points of the conversation?

A. As Bowe put it: “To cut a long story short, we sort of said [to the officials]: Look, what we need is €7bn. That kind of sobered up everybody pretty quickly.”

Q. Under what terms was the money sought?

A. It was presented as a request for emergency funding but Bowe tells Fitzgerald the officials were told: “It is bridged [a bridging loan] until we can pay you back… which is never.”

Q. What was the response from the officials?

A. Bowe mimicked the then financial regulator, Pat Neary: “Jesus, that’s a lot of dosh. Jesus fucking hell and God… Jesus, you’re asking us to play ducks and drakes with the legislation.”

Q. What case did the Anglo reps make to backup their request?

A. Bowe told Fitzgerald: “We said: Look, what we are telling you is that if we get into difficulties, we have €100,000-plus lump sum depositors in Ireland, all of whom would be very vocal.”

Q. How thorough were the officials in probing the request?

A. Bowe makes them out to be less than forensic, mimicking Pat Neary asking: “C’mere lads, have you actually got assets, decent assets that you can put in play? Is there stuff in there, like, that has value, you know?”

Q. Did the officials flex any muscle at the meeting?

A. According to Bowe, they said: “If you’re going for this now, make sure whatever you get sorts it out. In other words, whatever you get from the regulator sorts out the issue. Don’t be coming back [for more money].”

Q. Was Anglo confident it would get the money?

A. Bowe told Fitzgerald: “Well, it has to happen, it has to happen, because if it doesn’t happen, we’re going to hit a wall in the next week. We’re already in breach [of financial regulations], you know.”

Q. Would the money have sorted out Anglo’s problems?

A. No. As Bowe told Fitzgerald: “It buys us time. And I would say it buys us up to our year-end results. Max.”

Q. Was there any logic to asking for the figure of €7bn?

A. In reply to Fitzgerald asking how the figure was arrived at, Bowe said: “Just, as Drummer [then Anglo chief executive David Drumm] would say, I picked it out of my arse.” He goes on: “The reality is that actually we need more than that. But you know, the strategy here is you pull them in, you get them to write a big cheque and they have to keep, they have to support their money.”

Q. That sounds a lot like deception — is it just bravado on Bowe’s part?

A. Hardly. The conversation that follows shows it was a deliberate strategy coolly executed in the meeting.

Fitzgerald: “Yeah, they’ve got skin in the game and that’s the key.”

Bowe: “They have and they have invested a lot. If they saw the enormity of it up front, they might decide they have a choice. You know what I mean? They might say the cost to the taxpayer is too high. But, em, if it doesn’t look too big at the outset… if it looks big enough to be important, but not too big that it kind of spoils everything, then I think you have a chance.”

Fitzgerald: “Yeah, yeah”

Bowe: “So I think it [the bailout monies] can creep up.”

Fitzgerald: “Yeah, yeah, they’ll give you a bit of drip.”

Bowe: “Yeah.”

Q. But did Anglo believe in this as a realistic rescue strategy?

A. It seems not. Bowe told Fitzgerald he didn’t know what will happen and pointed out the bank would not be an attractive proposition for any potential buyers, saying: “Do I think it’s going to be possible to offload it? No, I don’t. What will it end up being? It could be breaking it up and selling individual books. It could be nationalisation.”