IRISH LIFE & Permanent (IL&P) placed a total of €6-7 billion on deposit with Anglo Irish Bank during the month of September 2008, including €4 billion on September 30th, the day the State bank guarantee was announced, The Irish Timeshas learned.
The Financial Regulator and the Government-appointed directors at Anglo Irish are investigating the placing of the €4 billion deposit by IL&P before Anglo’s year end on September 30th.
It is understood that IL&P withdrew its deposits from Anglo Irish within a week to 10 days later.
The regulator is examining the movement of deposits into the bank around its year-end and whether Anglo Irish artificially propped up deposits around the end of its accounting year in a bid to bolster its financial strength.
The regulator’s spokesman said: “There are various strands to our investigation into Anglo Irish Bank and this issue would be one of those.”
IL&P confirmed in a statement last night that it had placed deposits with Anglo Irish during September 2008 and in particular on September 30th following announcement of the Government bank guarantee scheme.
The company declined to confirm the amounts involved, but it is understood that the multi-billion euro sums involved the placing of about €4 billion on September 30th and a total of between €6 billion and €7 billion over the month.
IL&P said the transactions were “fully and appropriately accounted for” in the company’s books and records, and in reports and returns to the regulator.
“During a period of unprecedented turmoil in global financial markets there was an acceptance that financial institutions would seek to provide each other with appropriate support where possible,” the company said.
The regulator is already investigating the temporary transfer of loans off Anglo Irish’s balance sheet to Irish Nationwide Building Society by the bank’s former chairman Seán FitzPatrick over an eight-year period to September 2007. The transferred loans amounted to €122 million in 2007.
The regulator’s investigation was recently widened to examine the movement of deposits at the bank around its financial year-end.
David Drumm, Anglo Irish’s former chief executive, said at its annual results in December that €4 billion in large deposits had been withdrawn in the run-up to the guarantee scheme due to concerns about the bank’s viability.
The bank said last December it had €20.5 billion in deposits from other banks at its year-end on September 30th, 2008 – up from €7.6 billion a year earlier.
Deposit inflows are closely monitored by investors and stock market analysts as a sign of a bank’s financial strength.
Last December, Anglo Irish said that it had lost €4 billion in large corporate deposits and deposits from other banks during September, suffering “quite severe” outflows of wholesale funding.
Mr Drumm said at the time that no bank could have “weathered” that kind of leakage had it continued. Volatility in deposits at Anglo Irish was one of the reasons why the Government moved to nationalise the bank last month.
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