Anglo Irish Bank lost € 4 Billion in six Months

Another day, another scandal. This is now the norm here in the Irish banana republic.

Today's serving of outrage is the news that (the now nationalised) Anglo Irish Bank (right) has lost a total of € 4.1 billion in six months (the fourth quarter of 2008 and the first quarter of 2009).
This is on average a loss of € 683 million each month, or € 22.75 million every single day! And it is also the by far biggest bank loss in the history of the Irish state.

The bank's results also show that deposits from businesses have dropped by almost € 9 billion after nationalisation.

Anglo Irish Bank's new chairman Donal O'Connor says that "lending has been imprudent, and the results are very disappointing".

I put it a bit more bluntly: The bank's behaviour was nothing but criminal. And thus those who were responsible for the blunder should be prosecuted and brought to Justice.

Donal O'Connor also indicates that "the total loan losses are likely to reach € 7.5 billion".

Anglo Irish Bank has now written off the sum of € 308 million in relation to loans to ten 'long-standing clients', who then used these funds to buy shares in the bank.
The ten very wealthy individuals who participated in this scam subsequently became known in public and in the media as the 'Golden Circle'.
A total amount of € 451 million was lent by Anglo Irish Bank to members of the 'Golden Circle' , but as it looks the bank may not get € 308 million of that money back.

Among the losses disclosed today were also € 31 million on loans to former directors of Anglo Irish Bank.

The government now plans to seek the EU's approval to put another € 4 billion of State money - which means in fact Irish taxpayers' money - into Anglo Irish Bank in the coming weeks.

Finance Minister Brian Lenihan (left) has announced that he will recapitalise the rotten bank.
"Winding up Anglo Irish, the third-biggest bank in the country, is not an option," he stated, nailing his colours firmly to the mast of a sunken ship. "The priority is to stabilise the bank," Lenihan emphasised.

Well, I am no banker, but as an old sailor let me say this: One can well stabilise the wreck of a sunken vessel, in order to prevent it from drifting, slipping or from becoming a danger to other shipping. But one can never re-float and sail a ship after it was sailed onto rocks and crashed.

The Emerald Islander

Heated Dáil Debate over Banking Scandals

While more than 4000 civil servants and public sector workers - including Gardaí - were protesting outside Leinster House against the proposed new pension levy today (see entry below), a heated debate was going on inside the Dáil chamber.

Taoiseach Brian Cowen (left) angrily denied suggestions that he was attempting to protect anyone involved in the Anglo Irish Bank share scandal.
He accused Fine Gael leader Enda Kenny of "impugning his reputation", a charge vehemently rejected by the Mayo TD and most senior deputy in the Dáil .

Cowen told the Dáil that his government was "determined to ensure that due process is followed" and that - if wrong-doing is uncovered - "people will face the legal consequences".

Minister for Justice Dermot Ahern (right) said that he "would prefer that the ten individuals involved [in the fraudulent share-buying scandal] be revealed", but that "due process must be allowed to take its course".

Meanwhile it has come to light that the annual report of the now nationalised Anglo Irish Bank, which is expected to be published on Friday, will reveal that a property owned by a member of (former bank boss) Sean FitzPatrick's family was rented by the bank. It is understood that this property is in London.

The Taoiseach stated that he regarded regulatory reform of banking as "a top priority".
In relation to the so-called 'Golden Circle' of ten fraudulent share buyers, he said the issue arose because of "due diligence by the government". He explained that the debts remained and his government would ensure that these debts would be collected by the bank.

Fine Gael leader Enda Kenny (left) said the government had been "far too timid" about the situation in Ireland's financial institutions, because it was responsible for the failure to regulate the banks properly.
He asked the Taoiseach if he agreed that "a fraud has been perpetrated on the Irish Stock Exchange".

Labour Party leader Eamon Gilmore (right) asked why Brian Cowen, when he was Minister for Finance, ordered the Revenue Commissioners to reverse its decision to impose stamp duty on Contracts for Difference (CFD).
These are high-risk investment 'products' where investors can bet on the future direction of a stock, without having to actually buy shares.
Eamon Gilmore said Brian Cowen had already confirmed that he had been lobbied about the issue, and asked for the identity of those involved.

In reply the Taoiseach said as far as he recalled, the lobbying came from "a professional body", but he promised to check with the Department and provide details.

Meanwhile the Green Party has said that it "could review its support for the government if politicians are implicated in the latest banking scandal".
"We are still committed to remaining in government, but that is not an open-ended commitment," the party's chairman, Senator Dan Boyle (left), told a news agency.
Remaining questions about the scandals should be answered quickly instead of the recent 'drip-drip' of revelations, so the damage to Ireland's reputation could be repaired, Boyle added.

After the debate Fine Gael Enda Kenny stated that the public deserved to know the names of the 'Golden Circle' members.
Speaking on RTÉ's Six-One TV News, he said the Irish people now own Anglo Irish Bank and "are entitled to know what is going on".

I wholeheartedly agree, as anyone with a sound mind would. And to go one step further: I do not understand why the government appears to know nothing about all these scandals, and still - after the matters have emerged into the public domain - makes no active efforts to find out what was - and is - going on.
Is it the high level of pure incompetence in our government we have to blame for that, or is Fianna Fáil fully aware of more skeletons hidden in the government's cupboards...?

The Emerald Islander

And some good News coming through as well...

In my earlier entry from this afternoon I mentioned that some statisticians regard January 19th as "the most depressive day in the whole year" and indeed plenty of people obliged to make it so. In particular the stock brokers in Dublin and London, who sent the financial markets - but especially bank shares - down into the proverbial cellar.

Despite reassuring words from both governments - in Dublin and London - the world's financial dealers no longer trust us and the value of Irish and UK banks plummeted to another all-time low.
The hurried and quite shambolic nationalisation of Anglo Irish Bank by our government was fuelling the fires of distrust instead of sending the - intended - message of stability and 'business as usual'.
And in Britain the announcement of further billions of taxpayers' money being pumped into the sinking banks did not help them a bit. Quite the opposite. Many international finance houses, especially the cash-rich ones in the Far East on whose willing to lend we now depend more than ever, regard us with great suspicion. Subsequently UK bank shares fell by 68% today, losing over two thirds of the little value they now have in one single day!

The combined forces of government ignorance, regulators' laziness and sleeping on their watch, and bankers' criminal greed have holed both Britain and Ireland in a serious way well below the waterline.
The question by now is no longer when we can stop the ships sinking, but if we can stop them at all.

But even on this "most depressive day in the whole year" there is a little bit of good news as well. Five more directors from the disgraced board of Anglo Irish Bank have today announced their resignation from the board, in order to "make room for a new leadership team".
And not a moment too soon. In my opinion their resignation comes actually quite late, and I have not the slightest bit of empathy for these reckless bankers. They are responsible for the biggest financial and political crisis since the 1930s, and if I had the power, I would send them all to jail and throw away the keys...

An even better piece of news is that Brian Goggin (photo), the Bank of Ireland's highly incompetent chief executive, is stepping down as well.
The bank announced today that Goggin will retire this summer, a year earlier than planned. The bad news is that by retiring - instead of being sacked for the massive failure he presided over - Goggin will get his full pension, a golden parachute and many other perks he does not deserve and has not earned.

A man who presided over the collapse of a major bank that lost 95% of its value in less than two years deserves to be sacked, flogged and made to pay for his disastrous lack of leadership.
But as corrupt as our system is, this is unlikely to happen. Brian Goggin will go home as a multi-millionaire and enjoy a jet set lifestyle for the rest of his days. The bill for his folly will be paid by us - the Irish tax payers. But given the fact that for more than a decade a majority of us has persistently elected the most incompetent politicians to government again and again, we deserve nothing else. (And anyone who will in future vote for Fianna Fáil or the Green Party deserves that things get a lot worse than they are already...)

I suppose we should be content with the good news that five of the main gangsters from Anglo Irish are gone and that the arrogant fool Brian Goggin is following suit soon. All in a day's work, and not so depressing after all...

The Emerald Islander

The Cat is out of the Bag

Sean FitzPatrick, chairman of the Anglo Irish Bank and for more than 20 years its chief executive, has openly admitted that his bank - like many other financial institutions in Ireland, Britain, the USA and other parts of the western world - "made serious mistakes". However, he rejected the accusation - made by politicians and media alike - that they had been "reckless".

Speaking with Marian Finucane on RTÉ Radio 1 this morning, FitzPatrick also stated that he is "grateful for the € 400 billion guarantee scheme introduced by the government".
He added that banks would pay the full cost of the guarantee, and the taxpayer would only be called upon "if all the banks fail".

I would not have thought that I ever hear a senior banker make such a statement, and make it in public. It appears that the global financial crisis, which in Ireland's case is first and foremost a massive under-capitalisation of the banks, is more serious than even pessimists expected.

When the chairman of one of the country's major banks mentions the possibility of a failure of all banks on national radio, we all should sit up and listen very carefully.

Until very recently such a sentence would have been seen as economic blasphemy and no-one would have spoken these words, not even behind closed doors, in the cosy clubs and circles where money people meet and socialise.

Now the cat is out of the bag, as we sailors would say, and for everyone to see and hear. Let's hope that there are some sensible people left in government and international finance. Otherwise we might all get a free ride this winter - down to hell in a handcart.

The Emerald Islander