Matt Moran, the chief financial officer of Anglo in 2008, was today questioned by Paul O'Higgins SC, for the Director of Public Prosecution (DPP) in the trial of three Anglo bankers who have all pleaded not guilty to sixteen charges of providing unlawful financial assistance to ten customers of the bank to buy its shares in 2008.
Mr O’Higgins began by telling the jury that Mr Moran has been granted immunity against prosecution for the purposes of matters for which this trial is concerned and in respect of any other matters that may be the subject of prosecution.
Mr Moran agreed this was the case and came about after discussions with his legal representations and the DPP.
“I’m not suggesting you are guilty or not guilty of anything,” counsel told Mr Moran.
Mr Moran said he had a background in corporate finance and joined Anglo in 2002. He reported to Willie McAteer. He said he dealt with investor relations, and one of his jobs was “to market the story of the bank”. He also was charged with building the group finance of the bank.
Mr Moran has told the court: "During 2007 there was a lot of noise in the market about Mr Quinn having a potential holding or interest in the bank."
He said the rumour was that it was held in a CFD or derivative position rather than a real shareholding.
He explained to the court that the equity of a bank - the amount of money raised through shares - is the foundation on which a bank is built.
In order to lend money the bank must have a certain percentage of equity. He said: “If you have ten billion in loans you had to hold four hundred million in equity.”
He said the regulatory requirement at one stage was four per cent but that the market would “demand” higher equity. He said that in 2006 the bank raised €400m through shareholders and €500m in 2007.
He said the loans were not connected to the equity and the money loaned out came from other sources, such as funds raised from senior depositors, debt investors and the markets.
He said by 2007 the global financial crisis meant that it was becoming much harder for banks to raise this money.
He said that the collapse of the subprime mortgage market in North America left funding concerned about putting money in the subprime market and later about putting money in banks.
Seán FitzPatrick (65) of Greystones, Co Wicklow, William McAteer (63) of Rathgar, Dublin and Pat Whelan (51) of Malahide, Dublin have been charged with 16 counts of providing unlawful financial assistance to 16 individuals in July 2008 to buy shares in the bank, contrary to Section 60 of the Companies Act.
Mr Whelan has also been charged with being privy to the fraudulent alteration of loan facility letters to seven individuals.
All three men have pleaded not guilty to the charges.
Continuing with his evidence before proceedings finished for the day Mr Moran told the court that Willie McAteer told him that the bank planned to provide loans to customers to buy shares in the bank.
He said that on the morning of July 9th, 2008, he and Fiachre O’Neill met Mr McAteer.
He said Mr McAteer outlined the plan to approach clients of the bank and ask them to take on up to 13 per cent of the Sean Quinn CFD position and for the Quinn family to convert the rest of the CFDs to actual shares.
“He explained that the bank would provide lending to those clients and that loan would be of 25 per cent recourse,” Mr Moran said.
He said that later in the week David Drumm told him that he had received the approval from the Financial Regulator.
“He had spoken to the regulator about the transaction and he had got their approval and he gestured to me a thumbs up,” he said.
The trial has ended for the day.