Dilger explained he was trying to build a sustainable, long-term business model. The shareholders were having none of it. They wanted him out.
Seán FitzPatrick’s presence as a member of the board of directors acted as a lightning rod for the disaffection sweeping the room. Very unflattering comparisons were made between Dilger and FitzPatrick. The latter was the posterboy for the Celtic Tiger.
In January 2005, he had stepped down as CEO of Anglo Irish Bank and moved into the position of chairman. For his last full year in control, profit before tax stood at €504m, lending had reached €24bn and lending for 2004 alone came in at €6.3bn, up 35% on the previous year.
The results had been nothing short of spectacular. Over a decade, the bank went from gross assets of just £3.14bn (€4bn) assets in 1997 to €95bn by the end 2007. This propelled Anglo’s market value into the stratosphere. In 1997, it was worth just €250m. In 2007, it was worth €12.4bn, ranking fourth on the stock exchange league table after AIB, CRH and Bank of Ireland.
In 1997, you could have bought Anglo shares for just 81p (€1.03). In February 2007, they had climbed to €16.10 (€32.20 when the 2005 share split is taken into account). Anyone who bought 1,000 Anglo shares for €1,030 in 1997 would have shares worth €32,220 a decade later.
But when the bank was nationalised, equity shareholders, including many pensioners, saw their investment wiped out. Assets transferred to Nama will reach €34bn out of a total loan book of €73.2bn.
The bank threatened the solvency of the Government and it even looked at one stage as if Anglo could bring down the euro.
The Government introduced the State guarantee of the banking system on September 30, 2008, which provided unlimited cover for all depositors, senior and subordinated bondholders in Irish banks. The State was now on the hook for €400bn, three times the size of the country’s GDP.
The rationale was that banks were finding it extremely hard to secure day-to-day funding. A radical move was needed to shore up confidence in the banking system and ensure and liquidity would come back.
Then taoiseach Brian Cowen and then minister for finance Brian Lenihan both say they made that fateful decision because they accepted as bone fides the word of the chairmen and chief executives of the six banks that they were facing a problem of liquidity, not solvency. As it has now transpired, banks were insolvent and in the case of Anglo, hopelessly insolvent.
But how much did Cowen really know about the true position of the banks before September 30? After all, he had been minister for finance until June 2008. More importantly, how close was his relationship with FitzPatrick and how many times did they meet and what was discussed in the months prior to September 30, 2008?
It is known Cowen and FitzPatrick enjoyed a game of golf on July 28, 2008. Both claim Anglo was not discussed at that meeting. Were there other meetings over this period?
And how appropriate was it for Cowen to have attended the golf outing? What if it emerged George Bush had played a round of golf with Lehman’s chief executive Dick Fuld two months prior to the collapse of Lehman Brothers?
There are many useful comparisons between FitzPatrick and Fuld.
In Andrew Ross Sorkin’s book Too Big To Fail, there is a very revealing insight into Fuld. The Lehman’s lifer was driven to take massive risks by a corrosive inferiority complex. He was extremely envious of the ‘blue bloods’ who sat at the top table of Goldman Sachs.
His only perceived way of becoming part of the Wall St establishment was by making Lehman’s the biggest bank in town.
FitzPatrick was CEO of Anglo Irish Bank from its inception in 1986. Small in stature, he came from a small farming background outside Bray, Co Wicklow. Membership of the two big banks was for establishment figures only, certainly not an arriviste like FitzPatrick.
‘Seánie’ would spend the next 20-odd years trying to rectify that. In the 1990s, the economy started to grow exponentially. Anglo hit a winning formula: its sole line of business was to bankroll property developers. From 2000 onwards, bolstered by Anglo’s rising share price, FitzPatrick would himself become a client of the bank.
While he was this week found not guilty on all counts of providing unlawful financial assistance to the Maple Ten businessmen to buy shares in Anglo, he will face another criminal trial on charges of failing to make disclosures to the bank’s auditors the true value of loans worth at least €139m given to him, or people connected to him, by Irish Nationwide while he was an officer of the bank.
By December 2008, Anglo’s share price had tanked and FitzPatrick was forced to resign.
From then until his acquittal on Wednesday, Seánie — who had successfully become an establishment figure — became a social pariah.
While he has been found not guilty of unlawful conduct, it can be reasonably argued his single-minded determination to grow Anglo to become a peer of AIB and Bank of Ireland set in motion a train of events that caused the banking system to collapse.
Tired of having Anglo eat their lunch and see its share price outperform their own, the CEOs of AIB and BoI threw caution to the wind and embarked on a similarly reckless lending spree to the property sector.
While FitzPatrick was found not guilty of any wrongdoing, the damage inflicted by the bank he built cannot be questioned.
And the biggest casualty of all for this folly is the taxpayer, both here and across the EU.