Exclusive: Tapes reveal the lies and deception that led to the bank bailout
Published on Jun 24, 2013
Anglo was a controlled demolition of Ireland
The tapes are fascinating, but at the end of the day,
isn’t it just two colleagues having a light-hearted conversation? Why should we care?
The tone is light-hearted, but the content is serious. For the first time,
the Anglo Tapes bring us inside the heart of the banking collapse.
We can now hear in real-time a conversation between John Bowe and Peter Fitzgerald while they were in pivotal roles at Anglo.
As head of Capital Markets, it was Mr Bowe’s job to ensure Anglo had enough money to meet its financial needs.
His colleague Mr Fitzgerald was in overall charge of the bank’s retail customers,
crucially including knowing there was enough cash coming from Mr Bowe’s department as nervous depositors pulled out their cash from the bank.
We know the banks were bailed out, we know Anglo has cost us all a fortune, what is new?
The tapes reveal for the first time what many of us have long suspected. Senior executives at Anglo knew that the situation inside the lender was far worse than they were telling even the financial regulator.
Remember that this conversation was recorded inside the bank in the days immediately following the collapse of Lehman Brothers — but before the night of the bank guarantee.
Okay, so take us through it. What does it mean?
John Bowe informs Peter Fitzgerald about negotiations he’s been having with the Irish Financial Services Regulatory Authority (IFSRA) in the Central Bank.
Mr Bowe had been seeking an emergency loan to cope with the aftershocks of the Lehman collapse.
Q And the bank needed €7bn?
No. The figure has been in the public domain before but the tapes reveal that Anglo’s key finance executive knew the bank needed far more.
The request for €7bn was simply made up by John Bowe — “picked out of his arse” in his own phrase. Aside from the colourful language — this is a massive revelation.
What Mr Bowe describes is a deliberate strategy of misleading the regulator. He talks about making a request for a “bridging” loan from taxpayers to the bank. Like a credit card or an overdraft, a bridging is a type of loan with no specific repayment date. Mr Bowe cynically suggests the repayment will really be “never”.
Next, he describes how the €7bn is lower than what is really needed, arrived at so taxpayers will not realise the full extent of the crisis.
He’s trying to dupe the regulator into putting, as Mr Fitzgerald describes it, “skin in the game”. That’s market talk for having money at risk; typically an investor with skin in the game feels pressured to risk even more cash to protect that first loan. It’s what Mr Bowe predicts will happen once the State becomes exposed to Anglo Irish Bank.
Q Does it work? From the tone of the conversation, we understand that John Bowe has bamboozled the officials he’s been meeting. He describes “playing ducks and drakes with the regulations” and the threat to the wider financial system if Anglo gets into trouble.
Mr Bowe even reveals that as early as September 2008 he knew Bank of Ireland and AIB were not only too weak to rescue Anglo, but were in danger of being forced out of the financial markets themselves.
According to himself, it was Mr Bowe who first alerted the officials at the regulator’s office to the scale of the bank crisis. He is scathing about the survival prospects of smaller bank lenders — correctly, as it happened.
But Anglo got much more than just €7bn. Within two weeks, the entire finances of the State would be put at risk to save Anglo and the other banks.
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