Central Bank ‘had a green jersey agenda’

Banks urged to help each other, Drumm trial told

THE Central Bank encouraged a ‘green jersey agenda’ in which Irish banks should work together during a time of increasing financial turmoil, the trial of David Drumm has heard.

The former Anglo Irish Bank chief executive was behind efforts at the lender to respond to this call, Dublin Circuit Criminal Court was told.

The 51-year-old, of Skerries, Co. Dublin, is on trial accused of false accounting and conspiracy to defraud. The charges relate to what the prosecution says was a ‘wholly artificial’ €7.2billion transaction between Anglo and Irish Life & Permanent.

Matt Cullen, a director in Anglo’s treasury department in 2008, told the court yesterday he had known about the ‘green jersey agenda’. He also said he was aware Mr Drumm met the Central Case: Mr Drumm yesterday Bank governor. On March 16, 2008, the court heard, Mr Drumm emailed Anglo’s head of capital markets, John Bowe, to say: ‘Will you put some thought into what the governor asked us to look at – how the Irish banks can help each other.’

Mr Drumm asked Mr Bowe to identify ‘who we are talking about... AIB, Anglo, IL&P, INBS, EBS?’ He also asked: ‘How would this work, and how could it be structured so as to be equitable and get support from all banks... can you call to discuss?’ Mr Cullen said a proposed ‘liquidity pool’ between the banks never materialised.

However, he said he and his colleagues were asked by Mr Drumm to use contacts in other banks to explore the possibility of ‘back-to-back’ transactions.

Mr Cullen said Anglo was ‘cash long’ at the time, meaning that it had plenty of cash and was in ‘probably one of the best positions of any bank in Europe’.

But he said the bank needed to increase its ‘corporate number’ or corporate deposit figure by the time of its halfyear report on March 31, 2008.

He said the proposal was that Anglo would place cash with the other bank, which would return the money via one of its corporate entities. Bank of Ireland and AIB would not do this, he said, but his contact at IL&P agreed to a €750million back-toback transaction with Anglo, with the money recorded in Anglo’s accounts as a corporate deposit from Irish Life Assurance. This was twice the usual lending limit to IL&P, he said.

And on April 4, 2008, Mr Cullen said he was asked by the Central Bank to attend a meeting to discuss what Irish banks could do to help each other. However, no initiatives between banks were pursued, the court heard.

Anglo subsequently agreed to a ‘repo’ transaction with IL&P, in which it gave the bank €3billion at its year end in June 2018 in a deal which was quickly reversed, Mr Cullen said. He said IL&P had been instructed by the Central Bank not to show its ‘effing reliance’ on ECB funding. ‘We were just helping them out in the same way that they helped us out in March,’ he said of the €3billion deal.

The trial continues

‘Wholly artificial €7.2bn transaction’