Anglo’s figure was ‘manipulated and not real’, jury hears

A FORMER Anglo Irish Bank dealer told the Financial Regulator the bank’s customer funding figure was “not a real number” and it was “trying to manipulate our balance sheet”, a court heard.

Ciaran McArdle was on a phone call to Regulator officials the day after Anglo carried out a series of multi-billion euro interbank transfers in the runup to the struggling bank’s year-end at the height of the 2008 financial crisis.

A tape of the conversation was played to the jury in the trial of Anglo’s former CEO, David Drumm.

Mr Drumm (51) is pleading not guilty to conspiring to defraud Anglo investors by dishonestly creating the impression that the bank’s customer deposits were €7.2bn larger than they were.

The case centres on interbank loans which circulated between Anglo and Irish Life and Permanent in September 2008. Mr Drumm also denies false accounting. Mr McArdle’s understanding was that the transaction was going to be a “repo” trade (sale and repurchase of bonds) with ILP, he agreed with Mary Rose Gearty SC.

On the morning of September 30, the Government issued a guarantee scheme for bank deposits.

In the call to Financial Regulator officers the next day, Mr McArdle gave an update of the bank’s situation.

“It’s a different picture to where we were this time last week, it’s a different picture to where we were on Monday, but the overall reaction to the scheme has been very, very positive,” he said.

“The momentum has swung and the momentum is probably going to continue as long as there isn’t a change in the legislative paperwork going through the Dáil,” he went on.

Asked about the interbank market, he said “we haven’t gone chasing it” and that it was mostly on an overnight basis.

“This most certainly has fixed us somewhat but the system is broken. We need the State tonight to probably bring a little bit more confidence.

“We need more positive stories from the papers... we need this thing signed, sealed and delivered to see where the lie of the land is,” he said.

“Can I ask you about the corporate figure – is that still a net figure?” regulatory officer Clare Taylor asked later in the call. “That is still a net figure, that is correct,” he replied.

“It’s trying to manipulate our balance sheet for our financial year end last night. What we have done is we have boosted our customer funding number which we didn’t include in our liquidity number so when our snapshot is produced at the beginning of December, it looks as good as possible,” Mr McArdle said on the tape.

“It’s not a real number. I wouldn’t read too much into it. It just happened to fall on the last day of the month. It’s just something we did.”

The trial continues at Dublin Circuit Criminal Court.