Central Bank was aware of deposit

THE Central Bank knew about the huge inflow of funds into certain Irish banks last September as the banking crisis erupted.

In its October 2008 statistical bulletin the bank noted the outflow of Irish resident deposits were offset “by large deposits from financial companies in September, which were withdrawn in October”.

While no bank is identified, the comment makes clear the Central Bank was aware that some financial institutions had injected substantial funds into other Irish banks over that period.

It was disclosed yesterday that Anglo got an injection of €7 billion in September from Irish Life & Permanent (IL&P), of which €4bn was put on deposit with the bank on September 30.

That was the day after the Government threw a €440bn guarantee behind the deposits and loans of Irish banks and which also coincided with Anglo’s financial year end.

Critics said the latest revelations highlighted the cosy cartel being operated among the Irish banks with the full knowledge of the regulator and the Central Bank.

Niamh Brennan, director of UCD’s Corporate Governance Centre in UCD, said on RTÉ News yesterday that these latest revelations smacked of “fraud” as far as she could judge.

She also added that the hiding of €87m worth of loans from shareholders by former chairman Sean FitzPatrick, was an act of fraud.

Deposits from banks were up sharply from €11.6bn in March to €20.5bn in September and this is where the IL&P funds would have been placed, said analyst Anna Lalor of Goodbody Stockbrokers in a note to clients yesterday.

“If this is the case, it would certainly make last night’s pronouncement less material in our view, given the market’s primary focus is traditionally on customer deposits trends,” she said.

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