Taoiseach 'did not know' Anglo faced insolvency

TAOISEACH Brian Cowen insisted he did not know Anglo Irish Bank was facing insolvency the night the Government issued a blanket bank guarantee, despite attending an earlier meeting at which officials discussed the bank’s situation.

Mr Cowen told Labour Party leader Eamon Gilmore “No, I didn’t” when asked if he knew about Anglo’s insolvency that night in September 2008 when the guarantee was issued.

Bank of Ireland and AIB had emergency talks with the Government after Anglo told Bank of Ireland it was facing insolvency and sought a takeover.

Mr Cowen insisted the Government “took all necessary steps to preserve our economic system in this country in making that decision” to issue the blanket guarantee and he insisted “Anglo Irish Bank was a bank of systemic importance”.

And he said that if they had followed Labour Party policy at the time “it would have brought about a meltdown of the financial system, a nuclear winter in this country, hundreds of thousands of jobs would have been lost”.

Mr Gilmore said it was “very strange” that AIB and Bank of Ireland would not have disclosed Anglo’s insolvency to Mr Cowen that night after they rushed to Government Buildings and “when senior Government officials were talking about solvency issues in Anglo”.

He raised the issue highlighting the RTÉ documentary Freefall which dealt with the lead up to the blanket guarantee. Mr Gilmore said that on September 29th, 2008, Anglo’s senior executives had told Bank of Ireland they were facing insolvency, might not be able to open their doors the next day and sought a takeover by Bank of Ireland.

The bank refused but informed AIB and the two banks went to the Government to “have discussions about the crisis that was pending”.

Mr Gilmore said it was “very strange” that “Anglo had gone to Bank of Ireland and said we’re facing insolvency. When Bank of Ireland and AIB come rushing down to Government Buildings in crisis mode that they wouldn’t have shared that information with you. Is that what you’re telling us?”

He also referred to documents released by the Public Accounts Committee of discussions a few days before the guarantee, attended by Mr Cowen. At that meeting, the then secretary general of the Department of Finance said the potential loss exposures in Anglo on some assumptions could be €8.5 billion and Irish Nationwide €2 billion. Senior officials were “certainly in insolvency territory in their discussions”.

But Mr Gilmore said it was “very strange” that neither bank raised Anglo’s insolvency with the Taoiseach at the meeting. Mr Cowen insisted it had been made clear “that Anglo Irish Bank was a bank of systemic importance”.

Mr Cowen insisted that the decision to issue the bank guarantee was the right decision “with the exception of subordinated debt which was 3.3 per cent of the total volume guaranteed on the night”.

“So if I’m to be 97 per cent right rather than 100 per cent right, I’ll take that as well.” He rejected the Labour leader’s claim that the guarantee was the “worst decision in the history of the State”.