Saturday

1st Oct 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Analysis

Lessons from Ireland's failed bank guarantee

Five years after the failed Irish experiment of giving a blanket state guarantee for banks, the EU has more rules in place, but taxpayers' money is still on the line.

News in Brief

  1. EU ministers adopt measures to tackle soaring energy bills
  2. EU takes Malta to court over golden passports
  3. EU to ban Russian products worth €7bn a year more
  4. Denmark: CIA did not warn of Nord Stream attack
  5. Drone sightings in the North Sea 'occurred over months'
  6. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  7. New compromise over EU energy emergency measures
  8. 15 states push for EU-wide gas price cap

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Putin declares holy war on Western 'satanism'
  2. Two elections and 'Macron's club' in focus Next WEEK
  3. EU agrees windfall energy firm tax — but split on gas-price cap
  4. Ukrainian chess prodigy: 'We are not going to resign ... anywhere'
  5. Going Down Under — EU needs to finish trade deal with Australia
  6. MEPs worry Russian disinfo weakens support for Ukraine
  7. Everything you need to know about the EU gas price cap plan
  8. Why northeast Italy traded in League for Brothers of Italy

Join EUobserver

Support quality EU news

Join us