• Sun
  • Sep 21, 2014
  • Updated: 5:00am
BusinessBanking & Finance

Irish opposition calls for bank inquiry after tapes leak

Bank rescues helped push Ireland to seek IMF/EU bailout

PUBLISHED : Tuesday, 25 June, 2013, 10:39am
UPDATED : Tuesday, 25 June, 2013, 10:45am

Ireland’s opposition has called for a full inquiry into the collapse of the country’s financial system in 2008, after a newspaper published recordings of talks between Anglo Irish Bank executives about a bailout.

Rescuing indebted banks helped push Ireland to an 85 billion euro (HK$863.9 billion) IMF/EU bailout in 2010 and the topic provokes widespread anger in a country that is still enduring austerity and whose economy is struggling to gain traction.

The Irish Independent released transcripts of what it said were conversations between Anglo’s head of capital markets John Bowe and consumer banking chief Peter Fitzgerald in September 2008, at the height of Ireland’s financial meltdown.

According to the newspaper, Fitzgerald asked Bowe how the bank had come up with a figure of 7 billion euros (HK$71.1 billion) for the government to rescue Anglo. The bank eventually cost taxpayers some 30 billion euros (HK$304.9 billion) during the financial crisis.

“If they (the central bank) 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,” the Irish Independent quoted Bowe as saying.

“Yeah and that number is seven, but the reality is that actually we need more than that,” it quoted Bowe as telling Fitzgerald, who responded: “They’ve got skin in the game and that’s the key.”

The two executives said they regretted the conversation but denied any wrongdoing or intention to mislead the central bank. Bowe said he was not a decision maker in the bank’s funding requirements or talks with the central bank.

“In hindsight, I deeply regret that the language and tone I used in these internal bilateral telephone calls was both imprudent and inappropriate,” Bowe said in a statement.

In hindsight, I deeply regret that the language and tone I used in these internal bilateral telephone calls was both imprudent and inappropriate

Fitzgerald also regretted the tone of the conversation, according to excerpts of a statement read out by national broadcaster RTE.

Reuters did not have Fitzgerald’s full statement and the Irish Bank Resolution Corporation, the wind-down vehicle for liquidated Anglo, declined to comment.

Fianna Fail, in government at the time of the financial crisis that eventually forced the IMF/EU bailout and now the largest opposition party, said the tapes should be referred to the police and corporate regulators.

“Any suggestion that the taxpayer was lured into bailing out Anglo Irish Bank under a false impression about the state of the bank’s financial condition is deeply disturbing and has to be fully investigated by the authorities,” Fianna Fail finance spokesman Michael McGrath said.

The tapes were “shocking to the core”, said a second opposition party, Sinn Fein, joining calls for an investigation.

Prime Minister Enda Kenny said he understood voters’ “rage and anger” over bank bailouts and the government was seeking to finalise legislation to allow for an inquiry before parliament’s summer recess.

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