DIFFERING interpretations are emerging of a conversation between the Financial Regulator and Irish Life Permanent (IL&P) last October about whether the regulator accepted the bank’s transfer of €7.45 billion in deposits to Anglo Irish Bank.
Peter Fitzpatrick, who has since resigned as finance director of IL&P over the controversial deposits, informed the regulator’s head of banking supervision, Mary Burke, during a conversation on October 24th about the short-term transaction with Anglo Irish which took place in late September.
Ms Burke was told that if the regulator had any issue with the deposit to revert to the company.
IL&P presumed there was no difficulty with the transfer as the issue was not raised again until the regulator’s acting chief executive, Mary O’Dea, confronted the company about it and the mechanism used to transfer the €7.45 billion.
A spokesman for IL&P declined to comment yesterday. The regulator’s spokeswoman also had no comment on the conversation.
It is understood that the regulator maintains that Ms Burke had been making inquiries about the deposits during the conversation and did not pass judgment about whether the regulator approved it.
The regulator is investigating IL&P’s week-long deposits into Anglo Irish before the end of the bank’s reporting year on September 30th. It became aware of the deposits in October from the PricewaterhouseCoopers (PwC) report into the banks.
The inquiry is focusing on how the deposits were categorised and whether they were used to flatter the level of deposits at Anglo Irish.
IL&P claims the €7.45 billion was “inter-bank” deposits backed with collateral from Anglo Irish.
Anglo Irish maintains the money was corporate or customer deposits, coming from a non-banking subsidiary of IL&P.
IL&P’s stance is that the company did not believe there was an issue with the deposits given that it had explained the transfers to Ms Burke on October 24th.
The company maintains the deposits were only raised as an issue with Mr Fitzpatrick and IL&P’s then chief executive Denis Casey on January 21st by Ms O’Dea, who had taken over as the regulator’s chief executive from Pat Neary following his early retirement.
IL&P has since expressed its “strong disapproval and disappointment” with the measures used to support Anglo Irish.
The company’s chairwoman, Gillian Bowler, has said that while IL&P’s only motivation was to support the policy of the regulator and the Central Bank to encourage inter-bank lending between Irish institutions, the manner of the transfers to Anglo was “wrong”.
The regulator repeated in a statement yesterday that it had encouraged inter-bank lending between the Irish financial institutions last September and did not approve of the nature of the €7 billion transfers between the lenders.
The regulator said the use of a non-banking subsidiary had not improved liquidity between the banks, which it had encouraged.
The Sunday Tribune, citing an internal audit report compiled by Anglo Irish, reported that a senior Department of Finance official assured IL&P at a meeting on January 22nd that there was no need for concern over the deposits.
The Anglo Irish report said IL&P took “a lot of comfort” from the meeting and were left with “the clear impression that they should not be worried about it”.
It is understood the department claims its official told IL&P the deposits were an issue for the regulator and that he gave no suggestion that the department approved the transaction. A department spokesman said it never approved the transaction and it referred the matter to the regulator when it was highlighted by PwC.
