Former Anglo Irish Bank chairman  Sean FitzPatrick has been arrested  again in the ongoing inquiry into alleged financial irregularities .

He was  arrested  on Friday 9th Dec and is being held at Bray Garda station under section 4 of the Criminal Justice Act 1984. He was previously arrested in 2010 and released without charge.

Former finance director of Anglo Irish Bank Willie McAteer was also arrested for a second time last month for questioning about alleged financial irregularities at the bank. He was later released without charge.

Three files on the investigations into Anglo, now almost three years old, have been sent to the DPP.

UPDATE  – Mr Fitzpatrick was released without charge yesterday

Are My Savings in Ireland Guaranteed?

(Updated  Dec 4th  2011 )

A potted history of Irish Banking Guarantees

First of all we had the Irish  Deposit Guarantee Scheme (DGS), which covered the first €20,000 per person in all the financial institutions that are authorised by the Irish Financial Services Regulatory Authority to operate in Ireland.

September 2008
The limit under this Deposit Guarantee Scheme  (DGS) was increased from 20,000 euro to 100,000 euro in September 2008 and Credit Unions were also included for the first time. This guarantee is still in place and does not have an end date.

Also In September 2008,  the Irish Government announced it would guarantee 100% of all deposits in the following  Irish banks and building societies:  AIB; Bank of Ireland; Anglo Irish Bank; Irish Life Permanent; EBS; Irish Nationwide Building Society; and Postbank.

This is known as the Credit Institutions (Financial Support) Scheme (CIFS) and this “guarantee”  was due to expire on  September  29th 2010.

December 2009

Just to confuse us all a bit more – on December 9th 2009 the Irish Government introduced the “ Credit Institutions (Eligible Liabilities Guarantee) ” (ELG) . The new guarantee excluded subordinated debt and extends to instruments with a maturity of up to five years.

It only applies to  those institutions that applied to join the scheme.
AIB, Bank of Ireland , Irish Life & Permanent ,Anglo Irish Bank , Irish Nationwide and EBS have  joined the ELG scheme.

This  new ELG scheme did not extend the guarantee for on-demand deposits past September 2010  – but it did  extend the guarantee for some fixed-term deposits for up to 5 years (2015) . To qualify for the new guarantee – the fixed term deposit must have been  placed with a participating institution after it has joined the ELG scheme and before September 29th, 2010.

June 28th 2010
In June The ELG scheme was extended to December 31st 2010 for  all retail deposits. Also – for  fixed term deposits – the cut off date for placing the deposit with with a participating institution was extended to 31st December 2010 .

(Other types of deposits and liabilities also had their guarantees extended to Dec 31st - but not Interbank deposits or short term (under 3 months) bank liabilities,  or corporate  deposits or short term  debt securities)

September 8th 2010

The  Minister for Finance  announced that the ELG was now extended  for the types of instrument that were  excluded from the extension announced in June 2010 – i.e short term bank liabilities, including corporate and interbank deposits as well as debt securities . The extension on these is also to 31 December 2010.

November 2010
The ELG – Eligible Liabilities Guarantee was extended to the end of June 2011

June 2011 – the Eligible Liabilities Guarantee was extended to the end of December 2011.

December 2011 – the Eligible Liabilities Guarantee was extended to the end of June 2012 .

For the majority of the general public with  savings accounts the main points to note are these:

Retail deposits  (On demand or fixed term) of up to €100,000 will continue to be covered under the Government’s deposit guarantee scheme which does not have an expiry date.

On-demand deposits of more than €100,000 are guaranteed until the end of Dec 2011  at AIB, Bank of Ireland , Irish Life & Permanent ,Anglo Irish Bank , Irish Nationwide and EBS

Fixed  Term deposits of more than €100,000, which pay an interest rate for a set period of time, are covered to the end of the fixed term up to a maximum of five years. The fixed term deposit must have been started  after the bank joined the ELG scheme and before July 2012  (Only at at AIB, Bank of Ireland , Irish Life & Permanent ,Anglo Irish Bank , Irish Nationwide and EBS)

So – the sensible thing to do if you have more than €100,000 on deposit with one of the Irish banks – is to either split it up into and spread it across other banks or move it into a fixed term deposit account with one of the “ELG” institutions before  the end of June 2012.

See a  Summary of Irish Bank Guarantees Here

We understand the following protection is in place with the following institutions: This is the latest information on the level of guarantee or protection for money held in Irish financial institutions or those operating in Ireland.

Updated in September 2011

Post Office Savings Bank; . Irish Government guarantees all deposits with no end date

Under the Deposit Guarantee Scheme – amounts of up to €100,000 are guaranteed in the following institutions (no end date on this)

Allied Irish Banks plc (AIB)
Anglo Irish Bank
Irish Life & Permanent plc (PTSB)
Bank of Ireland
EBS Building Society
Irish Nationwide Building Society
ICS Building Society
ACC Bank
Bank of Scotland (Ireland) t/a Halifax
Credit Unions
First Active
KBC (IIB)  Bank
Pfizer International
Postbank
Ulster Bank

Amounts over €100,000 are covered until the end of 2011 under the Eligible Liabilities Guarantee  (ELG) in the following six institutions :-

Allied Irish Banks plc (AIB)
Anglo Irish Bank
Irish Life & Permanent plc (PTSB)
Bank of Ireland
EBS Building Society
Irish Nationwide Building Society
ICS Building Society

Note - the ELG also covers fixed term deposit accounts to the end of the term (max five years)  as long as the deposit was made before the end of  2011 and after the date the institution joined the ELG scheme (most joined  in Jan 2010)

Credit institutions covered by other schemes

Danske t/a National Irish Bank The Danish scheme covers up to Kr300,000 or approx. €40,000. The balance up to €100,000 is covered by the  Irish Deposit Guarantee Scheme

Rabobank The Dutch Central Bank Dutch Deposit Guarantee Scheme; 100% of the first  €100,000 per person..

Investec Bank (UK) Ltd The UK FSA Financial Services Compensation Scheme;100% of the equivalent of €100,000 per person.

Leeds Building Society The UK FSA Financial Services Compensation Scheme;100% of the equivalent of €100,00 per person.

Northern Rock the  equivalent of €100,00 per person. is  protected under the UK Financial Services Compensation Scheme .

Nationwide (UK) Ireland
The UK FSA Financial Services Compensation Scheme;100% of the equivalent of €100,00 per person.

A report titled   “MISJUDGING RISK: CAUSES OF THE SYSTEMIC BANKING CRISIS IN IRELAND“  has been released this week. It was comissioned  by the last Minister of Finance – Brian Lenihan who set up the “Statutory Commission of Investigation into the Banking Sector in Ireland”

There was only one member of this Comission – Mr  Peter Nyberg.
Surprisingly  – the mandate of the Commission did not include investigating possible criminal activities of institutions or their staff.

Some of the highlights from the Nyberg Report:

“Ireland’s systemic banking crisis would have been impossible without a widespread suspension of prudence and care by those responsible for bank management as well as by those charged with ensuring responsible financial conduct.“ ..

“Although clearly affected by external conditions , the Irish crisis was in all essential aspects home-grown.“  …..

“Public policies either came to support or tolerate increasingly frothy domestic growth financed by foreign debt routed through increasingly fragile Irish banks. This occurred despite a number of international examples of how similar developments had ended unpleasantly.  These should surely have served as warning signs.”

On Auditors:

“They did not, however, generally report excesses over prudential sector lending limits to the Financial Regulator. Even if they had, it appears unlikely that anything would have been done about it as in general the Regulator  was already aware of such limit excesses.”

On the Financial Regulator

“There were numerous instances of non-compliance with respect to banking regulations and guidelines which went unsanctioned by the Financial Regulator. In some cases (Anglo and INBS), where the FR did raise concerns, they sometimes led to little real change and there was little follow through by the FR. Bank management drew undeserved comfort from the acquiescence of the FR in relation to this non-compliance.”

“The real problem was not lack of powers but lack of scepticism and the appetite to prosecute challenges.”

On the Central Bank

“there are signs that a hierarchical culture, with elements of self-censorship at various levels, developed in the CB. Of course, this eventually made it even harder to address the increasing instabilities in the financial market.”

“If the CB management had identified or given sufficient weight to macro-economic vulnerabilities, it could and should have initiated discussions with the FR to ensure a deeper analysis of individual banks’ regulatory returns.”

On the Department of Finance

“The DoF also did not make any efforts to strengthen its own financial market expertise despite crisis management exercises in the EU having shown a need for it among finance ministries.”
On the Irish People

“The widespread consensus as well as the confidence, until the very last moment in late 2008, that everything would end relatively well points to the existence of a national speculative mania in Ireland during the Period, centred on the sale and acquisition of property. Warning signs were ignored as continuing economic stability was confidently assumed.”

“During much of the Period, Ireland was still seen as a success story that provided a largenumber of its inhabitants with self-esteem as well as rising incomes, wealth and welfare. Anybody seriously interfering with this process would expect to be publicly castigated as causing the very distress, loss and crisis that they would have been trying to prevent. Instead,by allowing the party and deal-making to continue, management, investors and public and private watchdogs participated in its positive but temporary gifts.”

Today – 24th Feb 2011 – it was announced that €8.6 Billion of  deposits at Anglo Irish Bank will be transferred to Allied Irish Bank.
The Minister for Finance – probably in his last day in the job , announced the immediate transfer of the majority of the Irish and UK deposits and certain NAMA bonds  from Anglo Irish Bank Corporation Limited ) to Allied Irish Banks p.l.c.

The Central Bank say that  “No action is required by depositors as a result of this transfer. There will not be any immediate change in how depositors deal with their accounts. Deposits can be accessed as normal through the relevant institutions and depositors can continue to do business as normal with Anglo Irish Bank”

Allied Irish Banks PLC will also receive senior National Asset Management Agency bonds with a nominal value of approximately EUR12.2 billion,

AIB, which was effectively nationalised late last year will transfer 3.5 billion euros to Anglo and purchase Anglo’s Isle of Man unit for 200 million euros.

Anglo Irish deposits introduced through branches in Vienna, Dusseldorf and Jersey are not affected by this  Transfer Order .

Any queries can be directed at  Anglo’s relationship team: +353 1 616 2618 (Monday to Friday, 9am – 5pm)

In a related transfer – all Irish Nationwide Building Society deposits will be transferred to  Irish Life and Permanent (PTSB) .

The promised “restructuring” of Anglo Irish Bank and Irish Nationwide Building Society (INBS) can now begin after a  A High  Court order was made today (Feb 8th 2011) permitting  an auction of deposits and  assets  in both of the financial institutions.

The auction will result in  the deposits and assets in both institutions being transferred to another institution. Eventually Anglo Irish and the INBS will be merged into a smaller government controlled bank.

The deposits at deposits at Anglo Irish are about  €14 billion  and about €4 billion at Irish Nationwide . These will still be covered by existing Government guarantees
Irish Nationwide said ” Customer deposits remain fully secure, our branch network remains open and customers should continue to transact as normal. ”

The Dept of Finance said  that INBS and Anglo branches and call centres are expected to  continue to operate as normal .  INBS and Anglo will  set out any  transitional arrangements that will  apply following any transfer of the deposits and assets in both institutions.

Mortgages -  The Court Order in respect of INBS does not affect the mortgage assets of INBS. Any mortgage loan a person has with INBS is not affected. Anglo Irish did not do residential mortgages.

Jobs – Anglo Irish  has around 1,200 staff and Irish Nationwide about 440 – job losses are to be expected in the regionof 200.

The CEO of Anglo Irish Bank has written to customers  this week .

In the letter he says

“It has also been widely reported that the Bank is likely to close by the end of January. I can assure you that this is not the case. There is no plan or intention to pursue such an outcome. There is, however, an initiative underway to change the name of the Bank. ”

He states that there are no plans in place to transfer deposits to another bank – but goes on to say how it would work if it was to happen…
The letter says
“   it may, however, be more benecial for Ireland if the most stable and valuable customers, with their deposits, are concentrated in a small number of Banks that will be key to supporting the nation’s growth as the economy bottoms out and moves into recovery. It is very important that Ireland re-builds its banking sector as doing so is an absolute pre-requisite to supporting lending activities to individuals and businesses in the future. We would be very sorry to see any of our long standing and loyal customers move their business to another bank, but understand if it does happen, that there may be very good reasons for this. ”

Full Letter

Foreign Bondholders of Anglo Irish revealed.

Anglo-Irish Bank has cost the Irish taxpayer at least  €30 Billion .  If it had been allowed to collapse the main losers would have been the shareholders and bondholders.
A site in the UK has published a document that apparently lists all the foreign bond holders in Anglo Irish. These are some of the people and companies that the Irish government seem to be protecting by using taxpayers money. There are a lot of German , French and UK companies on the list.
The website that revealed the list – asks “is the ECB is forcing Ireland to protect German investments”.

Goldman Sachs are on the list too    – their chairman Peter Sutherland who was  chairman of oil giant BP until last year and former attorney general of Ireland,  recently warned there was “no way” Ireland could walk away from the cost of Anglo Irish Bank.

(See Irish Times)    Sutherland is also reported in that article as warning that removing protection for Anglo bondholders “might not be a wise course of action”.
Goldman Sachs profits in 2009  were  $13.4billion

We seem to have  an international welfare state for super-rich bankers. They pay themselves mega bonuses when times are good and expect the rest of us to bail them out when times are tough – even though it was the finance sector that has thrown the world into recession.

See the List at  Order-Order.com
Also Some interesting Irish discussion on the list here

A bit more information on the bondholders here