# Statement by Irish Life &  Permanent plc.*



## VOR (13 Feb 2009)

Irish Life & Permanent PLC
13 February 2009
Statement by Irish Life & Permanent plc.
Friday 13th February 2009. The Board of Irish Life & Permanent plc met last evening to discuss transactions which took place during 2008 between companies in the Group and Anglo Irish Bank.
It was noted that the Financial Regulator had communicated to the Non Executive Directors of the Board in person last May that it was a policy objective of both the Central Bank and the Financial Regulator that Irish financial institutions would work to support each other in the face of an unprecedented threat to the stability of the Irish financial system arising from the international credit crisis.
However, the Board has expressed its strong disapproval of and disappointment with some of the specific measures used to support Anglo Irish Bank during 2008 and the fact that the Board itself was not informed of the specific manner in which such support had been afforded to Anglo Irish Bank.
The Board accepted with sadness the resignation of Group Finance Director, Peter Fitzpatrick, who was the longest serving Director. The Board wishes to acknowledge that throughout his career with the Group, Mr. Fitzpatrick had always acted with the utmost integrity and professionalism. Furthermore the Board acknowledged that in respect of this matter, the only motivation was to provide support for the broader financial services sector in accordance with his understanding of the expressed wish of the Financial Regulator and the Central Bank.
The Board also accepted with regret the resignation of the Head of Group Treasury, David Gantly. The Board acknowledged the extremely high level of integrity and professionalism shown by Mr. Gantly throughout his service
with the company and fully accepts and recognises that he too had acted in line with his genuine understanding of the express wishes of the Regulatory Authorities in attempting to provide support for the wider financial sector in Ireland at
a critical time in the economic life of the country and its financial system.
The Board declined an offer of resignation by Group Chief Executive Denis Casey.
David McCarthy, Chief Financial Officer, has been appointed by the Board as Group Finance Director to replace Peter Fitzpatrick - subject to regulatory approval. The Chairman of the Board, Gillian Bowler, said that while it was clear
that the only motivation of the individuals concerned was to support the policy objective of the Financial Regulator and the Central Bank, the manner in which specific support was advanced to Anglo Irish Bank during 2008 had been wrong; "I
have absolutely no doubt about the integrity of the individuals concerned. However in providing support to the broader financial infrastructure, mistakes were made -for which I and the Board apologise unreservedly."
The Chairman also confirmed that the Board has initiated a full review of its processes and procedures to ensure that these events can not arise again.
Additional Financial Information:
In the interests of clarity, Irish Life & Permanent plc (IL&P) is making disclosure of the nature and extent of the Group's dealings with Anglo Irish Bank (Anglo) across each institution's reporting dates. We emphasise again that each of these transactions was properly accounted for in the Group's [Irish Life & Permanent plc] books and records and were fully disclosed in our regular reports and returns to the Financial Regulator.
Deposits lodged with Anglo Irish Bank:
On 31st March 2008, at the request of Anglo, IL&P, through its subsidiary Irish Life Assurance (ILA), deposited E750 million overnight on receipt of E1 billion cash into Permanent TSB which was offered as collateral in respect of the
deposit. During September, at the request of Anglo, IL&P, through its subsidiary ILA, deposited a total of E3.45 billion with Anglo in 5 separate deposits [on dates from 26th September to the 29th September] accepting E3.45 billion of cash
into Permanent TSB which was offered as collateral in respect of these deposits.These transactions matured on the 2nd and 3rd October.
On the 29th September, IL&P was contacted by Anglo on three separate occasions requesting further advances which were declined as further collateral was unavailable from Anglo to support such deposits.
On 30th September, following the introduction of the Government Guarantee Scheme, and again at the request of Anglo, IL&P, through its subsidiary ILA, agreed to place a total of E4 billion on deposit overnight with Anglo on receipt of E4 billion into Permanent TSB which was offered as collateral in respect of these deposits. This transaction occurred in four tranches. These transactions matured on the 1st October.
IL&P plc:
As part of IL&Ps ongoing wholesale funding programme, the bank enters into normal secured interbank transactions of short term duration with a number of participants including the ECB. In accordance with market norms, these involve the pledging of eligible mortgage assets in exchange for cash with the transactions being accounted for as interbank deposits.
At 30th June 2008 IL&P had outstanding E7.73 billion of such transactions. Anglo's participation in these transactions amounted to E3.33 billion. These transactions were correctly accounted for as interbank deposits in the interim accounts of IL&P. There were no material collateralised transactions with Anglo at 31st December 2008.

Contacts:
Barry Walsh
Head of Investor Relations
Ph: 01 7042678
Ray Gordon
MKC Communications
Ph: 01 6788330 [office]
Ph: 087 2417373 [mobile]


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## The_Banker (13 Feb 2009)

Only 2 heads rolled. Surely the CEO's position is undermined and he is a 'Dead Man Walking' at this stage.


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## yop (13 Feb 2009)

"It was noted that the Financial Regulator had communicated to the Non Executive Directors of the Board in person last May that it was a policy objective of both the Central Bank and the Financial Regulator that Irish financial institutions would work to support each other in the face of an unprecedented threat to the stability of the Irish financial system arising from the international credit crisis."

Does this mean that they were encouraged by the financial regulator to carry out such transactions??


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## VOR (13 Feb 2009)

yop said:


> Does this mean that they were encouraged by the financial regulator to carry out such transactions??


 
That is a question we need answered by the FR ASAP. 

"On the 29th September, IL&P was contacted by Anglo on three separate occasions requesting further advances which were declined as further collateral was unavailable from Anglo to support such deposits."

Thats an act of desperation if there ever was one. I wonder did they try other banks also. Old friends in Irish Nationwide perhaps??


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## yop (13 Feb 2009)

If the finacial regulator met in person with the banks, does that mean that Mr Neary who was paid off and is sitting perfectly, was behind this move????


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## The_Banker (13 Feb 2009)

Brian Linehan has called the CEO of IL&P back in again for another meeting this afternoon. 
Obviously he isn't happy that he is still in place. 

We are living in interesting times!!


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## Zarcava (13 Feb 2009)

VOR said:


> ...the Board acknowledged that in respect of this matter, the *only motivation* (of Fitzpatrick) *was **to **provide support* for the broader financial services sector* in accordance **with his understanding of the expressed wish of the Financial Regulator and the Central **Bank*.
> ... The Board acknowledged the extremely high level of integrity and professionalism shown by Mr. Gantly throughout his service
> with the company and fully accepts and recognises that *he too had acted in line **with his genuine understanding of the express wishes of the Regulatory **Authorities *...


This statement is absolutely outrageous. What it is saying in effect is that these two gentlemen did what they did for their country, as they understood the Fuhrer's orders. Does anybody believe a word of that? If I was BL I would be livid - no wonder he is meeting GB this afternoon.


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## The_Banker (13 Feb 2009)

Denis Casey has just resigned.


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## Eblanoid (13 Feb 2009)

Good riddance:
[broken link removed]


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## mercman (13 Feb 2009)

One Down and a heap more to go. BL had better get his finger out and boots on and make these institutions know full and well that the Taxpayers are holding them up. Damn Banks -- what a parcel of no goods,


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## yop (13 Feb 2009)

Ok another one gone.

BUT, will these 3 guys now also get a 500k euro payoff and 150k per year of a pension??? 
I mean all these guys like that little jumped up person from BOI who has to take a .9 million of a drop are all near retirement age so they are losing out on what, a year or 2 salaries, safe in the knowledge that they will get a pay off and a MASSIVE pension.

So really them resigning is pure shi*TE, not unless they also give up their pay off and pension it will be seen as meer lip service of sorts will it not?


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## Blarney (13 Feb 2009)

I agree totally wIth yop! I reckon they should not be allowed to resign. There should be a very fast investigation ( < month) to look into what the heck was going on and if their was wrongdoing then they should forfit any payoff and pension rights. After all they have already been paid a bundle over their years. Their is no doubt it all looks very dodgy but we need to know and know fast what was going on between these banks!! 
NO PAYOFFS OR NO PENSIONS FOR PEOPLE INVOLVED IN WRONGDOING, will we ever get to this????


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## Alex (13 Feb 2009)

i doubt it.


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## theresa1 (13 Feb 2009)

This Country is finished and the silence of the E.U. is deafening and you really think I'm going to vote yes to Lisbon  -for what? Go ahead FF destroy that little nice Country of your's - the E.U. will sit back and do nothing.


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## Carramore (13 Feb 2009)

A quick comment on theresa1's contribution is that the EU is all that's standing between us and a fate like Iceland's.  Voting Yes to Lisbon is our only hope.

Anyway, the main point I want to make is that the Minister seemed very vindictive in relation to Denis Casey this afternoon.  A personal view is that Casey has been by far the best of the bankers (not saying much, I know) throughout this crisis and it's a pity that he had to go.


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## Padraigb (13 Feb 2009)

theresa1 said:


> This Country is finished and the silence of the E.U. is deafening and you really think I'm going to vote yes to Lisbon  -for what? Go ahead FF destroy that little nice Country of your's - the E.U. will sit back and do nothing.



Given what we have done to ourselves, I think silence from the EU is something for which we should be grateful.


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## mercman (13 Feb 2009)

Blarney said:


> NO PAYOFFS OR NO PENSIONS FOR PEOPLE INVOLVED IN WRONGDOING, will we ever get to this????



Of course I agree. But everybody appears to be forgetting the big issue here, in all of these threads. 

These bloody Banks are owned by who ?? The shareholders  -- isn't it time that the shareholders voices are heard. Now those will say there is a contract and they are entitled to this, that and the other. These muppets had a contract to do their their duties in the best manner possible etc.etc.
So surely if it can be proved that they acted in a manner not in accordance with the Bank's principles, they are in breach of contract and their fantastic salaries, payoffs and pensions will become null and void.


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## DonDub (13 Feb 2009)

*Full text of Brian Lenihan statement*


_Statement issued by Minister for Finance Brian Lenihan this afternoon:_
_Last night I stated that the Board of Irish Life and Permanent must discharge its responsibilities in relation to the serious matters that have arisen. _

_I welcome Mr Casey's decision to resign from his position in the Group. This is an essential first step in repairing the reputational damage done to the Irish financial system by this transaction._

I beg to differ, the essential first step, in repairing the reputational damage done to the Irish financial system...is that Brian Lenihan and his colleagues in government should resign. It was their gross mismangement of the economy over the last decade that created the conditions for a 'wild west' banking culture i.e. light touch regulation, tax breaks for speculators,pro-cyclical budgetary policies........ It takes enormous cheek to try and take the moral high ground, pressuring others to resign.
The buck stops at the cabinets desk....the clean-out must start there!


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## mercman (14 Feb 2009)

I'm not here to defend this crazy situation. But if so many people found this culture so objectionable, why in hell's name did they keep voting them back in to Government. Especially in the last two elections they were voted in fairly. So apart from Labour changing their front man, there has been little significance change. No point in replacing this lot for another crowd of half wits.


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## DonDub (14 Feb 2009)

mercman said:


> I'm not here to defend this crazy situation. But if so many people found this culture so objectionable, why in hell's name did they keep voting them back in to Government. Especially in the last two elections they were voted in fairly. So apart from Labour changing their front man, there has been little significance change. No point in replacing this lot for another crowd of half wits.


 
Because there must be a 'moral hazard' i.e. a consequence for messing up; maybe the opposition would mimic FF behaviours, maybe they wouldn't, time will tell - in the meantime FF must pay for f.....g up!


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## extopia (14 Feb 2009)

Carramore said:


> A personal view is that Casey has been by far the best of the bankers (not saying much, I know) throughout this crisis and it's a pity that he had to go.



You're right - that's not saying much. 

How on earth is it a pity to see the departure of the head of a bank that made a massive, possibly fraudulent transaction (through a subsidiary, no less), that had the effect of prolonging the survival of a bankrupt institution that had played a huge role in fuelling a property bubble that in turn had allowed a FF govt to ingratiate itself to a selfish electorate by raising spending AND cut taxes, meanwhile branding dissenting economists as "loo-lahs," dissenting politicians as "failed persons", and at the same time welcoming runaway inflation as a sure sign that "the boom times are getting even more boomer"???

Goodbye and good riddance. Don't let the door hit your well tailored This post will be deleted if not edited to remove bad language on the way out.


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## Afuera (14 Feb 2009)

mercman said:


> These bloody Banks are owned by who ?? The shareholders  -- isn't it time that the shareholders voices are heard. Now those will say tofhere is a contract and they are entitled to this, that and the other. These muppets had a contract to do their their duties in the best manner possible etc.etc.
> So surely if it can be proved that they acted in a manner not in accordance with the Bank's principles, they are in breach of contract and their fantastic salaries, payoffs and pensions will become null and void.


mercman, I agree with your sentiment, but you're forgetting an important part of the equation. A sizable amount of the shareholders in the banks are institutions such as the insurance and pension funds. These are all part of the golden circle. They are not looking to rock the boat and if they had their way they would want it to return to "business as usual" and all that entails.


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## upport (14 Feb 2009)

yop said:


> "It was noted that the Financial Regulator had communicated to the Non Executive Directors of the Board in person last May that it was a policy objective of both the Central Bank and the Financial Regulator that Irish financial institutions would work to support each other in the face of an unprecedented threat to the stability of the Irish financial system arising from the international credit crisis."
> 
> Does this mean that they were encouraged by the financial regulator to carry out such transactions??


 
The whole Financial Regulatory Body is a discrace and an overhaul of key personel is required.Its main objectives need to be reestablished and transparent accountability to the Minister of Finance needs to be put in place.We are an International laughing stock and are unlikely to see international investment in our banks anytime soon.

Mention has been made of Anglo's motivation e.g. to build up deposits for 'snapshot' of accounts in order to portray healthy balance. This opportunity of a 'snapshot' should'nt even be available to a company. Surely better practice would be to have to show statement of deposit transactions over the year.

The Board of Irish Life were completely wrong to get involved with Anglo deposits,in hindsight they must see how suspicious the transaction appears and therefore why did they risk their own and their company's reputations? Did it seem the patriotic thing to do at the time i.e.help out a fellow financial institution who was experiencing difficulty and thereby perhaps assisting in helping to avoid an Irish banking crisis as was requested by Financial Regulatory Body in May 2008.

Bad decisions were made and it wouldnt surprise me if GB position is also untenable.


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