Anglo writes off loans of €308m to 10 clients

ANGLO IRISH Bank has written off €308 million it lent to “10 long-standing clients” to buy shares in the bank, the bank confirmed in its half-year accounts yesterday.

The loans, which amounted to €451 million in total, were secured on its stock. The stock is now worthless after the Government nationalised the lender in January in the wake of scandals that undermined the bank’s reputation and weakened its funding position.

Anglo also said it had taken a loss of €31 million on loans to former directors. The bank said it would seek full repayment of all loans and that all of the directors who have impaired loans were co-operating with the bank.

Anglo executive chairman Donal O’Connor refused to name the former directors with impaired loans, citing client confidentiality. He said that, as of the end of September, the point that marked the end of Anglo’s last financial year, he was not aware of either Irish Life Permanent’s temporary placing of a €8 billion deposit on the books of the bank or the unorthodox transfer of loans by former Anglo chairman Seán FitzPatrick.

Both the Irish Life Permanent deposit and FitzPatrick’s concealment of loans boosted Anglo’s balance sheet, effectively misleading shareholders.

Mr O’Connor said the board of Anglo Irish Bank, which he joined in June 2008, had been aware in July of the loans to the 10 clients.

“The board was not aware that there was anything unsatisfactory about the transaction,” he said.

Mr O’Connor said he had been told of the placing of the shares by Mr FitzPatrick. Asked if he understood the transaction to be legal and above board, he said “yes, because I was told that by the chairman”.

Asked if the matter had been discussed at a board meeting, he said: “I certainly don’t recall a discussion at a board meeting, but I can’t be sure.”

Mr O’Connor, a former managing partner of PricewaterhouseCoopers, said when he joined the bank he “wouldn’t have had a detailed knowledge” of banking.

“What I had to offer the bank was that I was someone who operated as a professional all their life, who has told it as it is, who has always done the right thing.”

Mr O’Connor said the bank was co-operating with investigations into irregular activity within its walls being conducted by the director of corporate enforcement Paul Appleby, the Financial Regulator and the Institute of Chartered Accountants in Ireland (ICAI). He said a search has begun to appoint a chief executive for the bank, which may be renamed.