Civil servant tells of optimistic Anglo presentation

Anglo Irish Bank provided a very optimistic presentation of its finances 10 days before the Government’s dramatic move to guarantee all deposits in six Irish banks, a top civil servant claimed today.

Department of Finance chief Kevin Cardiff accepted the bank’s stance in September 2008 – around the time the lender wanted to buy troubled Irish Nationwide – was outrageous.

The now state-owned finance house, represented at the meeting by then boss David Drumm, gave a presentation of its business model to the Department of Finance just over a week before the blanket €440bn protection.

Mr Cardiff revealed to the Dáil Public Accounts Committee (PAC) that the nationalisation of both Anglo and Irish Nationwide was being considered up until the evening of the guarantee.

And he said the claims from Anglo – nationalised four months after the guarantee – were treated with scepticism by officials.

“And I think it wasn’t the only outrageous thing they (Anglo) said or did,” he said.

“They were continuously over-optimistic in similar terms for some time thereafter.

“They suggested at different times that they would be able to raise private capital, for example, even into some months after the guarantee.”

Mr Cardiff told the PAC that the department was sceptical about the presentation.

“We didn’t believe they had the kind of prospects that they were suggesting,” he said.

Mr Cardiff said he believed the bank knew it was in trouble and was trying to manoeuvre itself into a similar position to Allied Irish Banks and Bank of Ireland in that the Government would see it as too important to fail.

Labour Party TD Pat Rabbitte said it took the biscuit.

“On the 18 September 2008 for Anglo to make a presentation to you like that, is it not an offence in Irish law, it would be in American law?” he asked.

Mr Cardiff said attempting to mislead the Department of Finance in Ireland was a sport in some places.

The senior official was being quizzed about the department’s thinking and quality of advice in the run-up to the guarantee on September 28 2008.

It comes just days after Government papers from the time revealed advisers from US bank Merrill Lynch warned the radical protection plan could be a mistake.

Mr Cardiff said it was decided a swift, all-encompassing approach was likely to get them through the week, but he branded the decision to guarantee the banks as “horrendous” for the Dáil to make.

“I was delighted I wasn’t a decision maker because it was a horrendous decision for anyone to have to make,” he said.

“It was a horrendous decision for the Dáil to make, in legal terms, two days later.”

The senior civil servant said the focus at the time was not on solvency issues but on liquidity.

Mr Cardiff said while they knew there were difficulties, it was not clear at the time that any of the institutions were in such financial turmoil.

“There wasn’t a picture available to us at that moment... that any of the institutions was likely to have such difficulty as to burn through its capital,” he said.