Bank did not act alone during crisis

Tapes unearthed in 2009 show regulators knew some of Anglo’s difficulties, investigative correspondent Conor Ryan.

WHEN played in isolation, the Anglo tapes tell a story of bank executives bidding to hoodwink a financial regulatory system acting in the best interests of taxpayers.

But while these may be the first tapes we have heard, they are not the first tapes we know about.

In Feb 2009, details of other phone calls to the regulator’s office also emerged. These were played down by the Department of Finance; they were the subject of legal threats and understandably, did not have the same impact without the public being able to hear the voices themselves.

These calls, exposed by the Sunday Tribune, revealed the tactic to massage the bank’s accounts was given the nod of approval from the man who was supposed to be policing the sector.

From them, we know the then financial regulator was made well aware that the bank had looked to make its accounts look incorrectly rosy in a bid to buy it time.

The new phonecalls, and the ones previously reported on, all focus on a period in late Sept 2008.

This month was marked by three key events:

* Lehman Brothers collapsed;

* Anglo was in the final days of its financial year and had a hole in its accounts to fill;

* The Fianna Fáil-led government moved ahead of Europe and created a sweeping €440bn bank guarantee.

In the midst of this, Anglo officials, including finance director Willie McAteer and chief executive David Drumm, met financial regulator Patrick Neary on Sept 17, 20 and 24.

The first meeting is critical in the context of this week’s revelations.

The first recording to be aired by the Irish Independent focused on an 11-minute call between Anglo executives John Bowe on Peter Fitzgerald.

It took place on Sept 18, 2008 — the day after an Anglo delegation met with Mr Neary for the first of three meetings to discuss its impending year-end accounts.

These were probed by the internal Anglo audit which carried transcripts of the phonecalls with Mr Neary.

Mr McAteer told the internal auditors that at the Sept 24 meeting, he had explained to Mr Neary that the bank would be “managing its balance sheet”.

Mr Neary’s reported reply was “Fair play to you, Willie.”

All the while, the bank was looking to fill an €8bn gap between its accounts and the required regulatory reserve. This amount is slightly higher than the €7bn the bank executives told each other had been “picked” from one of their arses.

But the contents of a phonecall immediately after the guarantee, on Sept 28, 2008, put paid to notions that the regulator was in the dark about the bank’s behaviour.

The call, from an Anglo official to the Mr Neary, explains the €7.5bn overnight loan the bank took from Irish Life and Permanent without sharing uncomfortable specifics.

“We boosted our customer funding number so when our snapshot is produced in December, it looks as good as possible, it is not a real number,” it said.

The official also told Mr Neary not to read too much into it.

We know about a second call two weeks later when two Anglo officials briefed the regulator. During this conversation, Mr Neary asked what the accounts would look like if it had not found the “chunk of money” used to bulk up its capital ratios.

One official said he did not know but that there would be a significant difference.

“I don’t know. What is it, seven [billion]… I don’t know,” he said.

Rather than jarring with the imprudent phonecall we have heard between Mr Bowe and Mr Fitzgerald, or the mocking calls shared with Mr Drumm, the briefings to the regulator suggest the bank was not acting alone.

They laughed about the bank falling into the lap of taxpayers and exploiting the guarantee that ultimately sunk the sovereign.

However, the earlier tapes show the regulator, who was supposed to be representing those taxpayers, had a grip of the green jersey and was egging them on.

“Fair play to you, Willie.”