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'On the night of the guarantee there was an announcement and we all went home to bed'

The Bank of Ireland’s former governor said Brian Cowen was the one who suddenly dropped the news.

Former taoiseach Brian Cowen
Former taoiseach Brian Cowen
Image: AP Photo/Geert Vanden Wijngaert

Updated 16.51

FORMER TAOISEACH BRIAN Cowen suddenly sprung the news of a bank guarantee to officials from the two pillar banks after they had offered to prop up the floundering Anglo.

Former Bank of Ireland governor Richard Burrows today said his bank and AIB agreed to together provide €10 billion to keep the toxic Anglo Irish Bank afloat when he met with government officials on the night of 29 September, 2008.

The meeting included then-taoiseach Cowen and finance minister Brian Lenihan.

Burrows told the Oireachtas banking inquiry that it was wasn’t until after the question of supplying money to keep Anglo at least temporarily solvent was resolved that the idea of a guarantee even “came on the table”.

The focus that night was on a single issue – and that was the liquidity crisis Anglo was facing,” he said.

Bank of Ireland AGM Former Bank of Ireland governor Richard Burrows in 2009 Source: Niall Carson/PA Wire

But when he and other senior figures from Bank of Ireland and AIB returned to the room after leaving government heads in discussion, Cowen announced a decision had been made to guarantee all the banks.

“The response from the government that night was ‘thank you very much (for the offer), we are actually going to go for a guarantee’,” he said.

On the night of the guarantee there was an announcement of the guarantee – and then we all went home to bed.”

Burrows said it was only in the aftermath of the government’s official announcement the next morning that issues like guaranteeing bonds and subordinated debt were first raised.

Irish Financial Banking Crisis Source: Mark Stedman/Photocall Ireland

Different versions

Burrows’ version of events was similar to that offered by former Bank of Ireland chief executive Brian Goggin at an earlier session, but it differed sharply from former AIB head Eugene Sheehy’s evidence.

Sheehy claimed both AIB and the Bank of Ireland wanted a four-bank guarantee but they were dismissed from the meeting in the early hours of the morning before any decision was made.

He said he only learned Anglo and Irish Nationwide were included in the guarantee when the government issued a statement next morning – and added he “could not understand” the reason for the decision.

A Bank of Ireland memo for a meeting that afternoon also said the government would provide a guarantee, but Burrows today denied that had even been discussed.

Burrows2 Source: Oireachtas.ie

“I am not aware of the range of options considered by the government at the end of September 2008 and am therefore not in a position to comment on the appropriateness of the guarantee as against those other options,” he said in his opening statement.

I would say, that, in my view, the immediate funding requirements of (Anglo) could have been dealt by a guarantee of the financial support which Bank of Ireland and AIB were prepared to make available in the short term. Such a decision may have given the Government more time to consider its options.”

First published 1.44pm

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About the author:

Peter Bodkin  / Editor, Fora

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