Thursday 20 October 2016

Lenihan wanted to let banks sink on night of the bailout - former AIB chief


Brian Lenihan
Brian Lenihan

FORMER AIB chairman Dermot Gleeson has said Brian Lenihan told him on the night of the Bank Guarantee that he would have preferred to wind down Anglo Irish Bank and Irish Nationwide.

The former Attorney General, who was present in Government Buildings that night, had asked that the guarantee be provided to four banks which did not include Anglo and Irish Nationwide, the Banking Inquiry heard.


Mr Gleeson said late Finance Minister Mr Lenihan had told him that night that he was prepared to let those two banks close.

Mr Gleeson would not be drawn, however, on whether Mr Lenihan was overruled.

AIB, he said, had proposed the two banks be "decommissioned in some way" and the guarantee given to the remaining banks to protect them against turmoil from the liquidation or nationalisation of Anglo and Irish Nationwide.

Mr Gleeson said he only became aware that all six banks were guaranteed through media reports next morning.

He also told the Oireachtas inquiry that controls on loans to developers by AIB were not "savage" enough and "we have to take the blame".

Mr Gleeson said his bank had lent too much to individual developers and "there were decisions made in AIB which made things worse than they need have been for Irish citizens".

He explained that many of the big property developers at the time were successful customers of the bank for 20 to 30 years who had always repaid their loans on time.

"I'm afraid we took too much comfort from that history," he said.

Mr Gleeson offered his "sincere regret" to the Irish people for his part in the crash.

Deputy Pearse Doherty questioned why AIB had paid out a €270m dividend to shareholders only three days before drafting the Bank Guarantee.

Mr Gleeson said the decision to do that had been made in June and approved by him "but it was undoubtedly a mistake" which was made to reassure the markets.

Mr Gleeson said that during his time as AIB chairman "I did my level best in this job and the outcome was entirely unsatisfactory".

He absolutely accepted this and added: "I can never get away from it."

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