Saturday

21st Jan 2017

Irish 'rage' after bank cheated on multi-billion bailout

  • Anglo-Irish collapsed with debts of €34 billion (Photo: William Murphy)

Irish leader Enda Kenny has said he understands "the rage and the anger" of Irish people on Monday (24 June) following a leak of taped conversations by two Anglo-Irish bank bosses which indicate the Irish government was conned into propping up the bankrupt lender.

The taped conversations, obtained by the Irish Independent newspaper, between John Bowe and Peter Fitzgerald, who led Anglo-Irish's capital markets and retail banking arms, respectively, indicate the Irish government was duped into pumping €7 billion of emergency cash into the bank on the assumption that it would plug the lender's funding crisis.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

But the €7 billion figure was just a ruse to get the government to put "some skin in the game," with the bankers assuming that politicians would have no choice but to provide further emergency funding once they had been "pulled in".

“That number is seven, but the reality is that actually we need more than that,” Bowe is recorded as saying.

"But you know the strategy here is you pull them in, you get them to write a big cheque and they have to keep, they have to support their money, you know,” he added.

On the same tapes, Bowe is heard apparently mimicking officials at Ireland’s Central Bank when they reacted to an initial request for a loan, saying: “There was a bit of, ‘Jesus that’s a lot of dosh... Jesus fucking hell'.”

He also claims officials reacted by saying: “‘Jesus, you’re kind of asking us to play ducks and drakes with the regulations’ and we said: ‘Yeah’.”

The phone conversations took place in September 2008, at the onset of the financial crisis following the collapse of Lehman Brothers.

But they come nearly two years before the true scale of Anglo-Irish's losses became clear.

Speaking on Monday (June 24) following the revelations, Prime Minister Enda Kenny said: “I understand the rage and the anger of so many people who have been affected by all of this.”

He added that the government would make a decision on a public inquiry into the collapse of Ireland’s banking system in “due course."

When the true scale of the bank crisis was revealed, Ireland was forced to negotiate a €67.5 billion eurozone bailout in autumn 2010.

Its decision to guarantee the liabilities of Anglo-Irish and the Bank of Ireland left it facing a €39 billion bill and a budget deficit of over 30 percent of GDP.

Under the terms of its debt deal, Ireland will repay the costs of the bank collapse over the next 10 years.

Following three years of budget cuts and recession, the Irish economy has is expected to grow by 1.1 percent in 2013.

Anglo-Irish bank has been renamed as the Irish Bank Resolution Corporation and is in the process of being wound down.

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

Stakeholders' Highlights

  1. Caritas EuropaEU States to Join Pope Francis’s Appeal to Care for Migrant Children
  2. UNICEFNumber of Unaccompanied Children Arriving by sea to Italy Doubles in 2016
  3. Nordic Council of Ministers"Nordic Matters" Help Forge Closer Bonds Between the UK and the Nordic Region
  4. Computers, Privacy & Data ProtectionThe age of Intelligent Machines: join the Conference on 25-27 January 2017
  5. Martens CentreNo Better way to Lift Your Monday Blues Than to Gloss Over our Political Cartoons
  6. Dialogue PlatformThe Gulen Movement: An Islamic Response to Terror as a Global Challenge
  7. European Free AllianceMinority Rights and Autonomy are a European Normality
  8. Swedish EnterprisesHow to Create EU Competitiveness Post-Brexit? Seminar on January 24th
  9. European Jewish CongressSchulz to be Awarded the European Medal for Tolerance for his Stand Against Populism
  10. Nordic Council of Ministers"Adventures in Moominland" Kick Off Nordic Matters Festival in London
  11. PLATO15 Fully-Funded PhDs Across Europe on the Post-Crisis Legitimacy of the EU - Apply Now!
  12. Dialogue PlatformInterview: Fethullah Gulen Condemns Assassination of Russian Ambassador to Turkey