Readers like you keep news free for everyone.

More than 5,000 readers have already pitched in to keep free access to The Journal.

For the price of one cup of coffee each week you can help keep paywalls away.

Support us today
Not now
Saturday 25 March 2023 Dublin: 7°C
# Banking Inquiry
AIB boss: 'I did my level best, but it wasn't enough. I can never get away from that'
Former AIB chair Dermot Gleeson is before the banking inquiry today.

Updated 1.49pm

gleeson 2 Oireachtas TV Dermot Gleeson Oireachtas TV

THE FORMER CHAIR of AIB has told the banking inquiry that the bank lent too much to developers during the boom and said he was sorry for the mistakes made.

Dermot Gleeson also revealed that AIB and Bank of Ireland favoured a four-bank guarantee, that would not involve stricken Anglo Irish Bank and Irish Nationwide. This was an approach then-finance minister Brian Lenihan favoured, he claimed.

In his opening statement, Gleeson said AIB lent too much to individual developers and said that the bank relied excessively on risk models that proved to be inadequate. 

Gleeson, a former attorney general, expressed “sincere regret” for his role in events and reiterated his apology made at the AIB AGM in 2009, the same year he stepped down from the bank’s board.

He said he agreed with the “broad thrust” of the subsequent reports into the crisis that have been published in recent years. Later in the inquiry, he said:

I was the chairman, the buck stopped with me. I did my level best, but it wasn’t enough. I can never get away from that.

Gleeson said the OECD, the EU, the Central Bank, the great majority of economists – but not all of them – and the board of AIB all favoured the consensus of a ‘soft landing’ as the downturn began.

“The consensus was wrong,” he said.

29/30 Septemer 2008

Gleeson said that on 29 September 2008, he received a phone call from the then-chairman of Anglo, Seán FitzPatrick, asking for a meeting, but the meeting did not happen.

He said in negotiations with government officials both AIB and Bank of Ireland had asked that Anglo and Irish Nationwide be “taken down” and that the four remaining banks be issued with a guarantee.

Gleeson later noted that Lenihan, who he was friendly with, had told him in conversation some months later that he had also favoured this approach.

“I didn’t find it surprising that there would have been different views,” Gleeson said, while not being drawn on whether Lenihan was overruled.

He said that he met the then-financial regulator Patrick Neary in corridor in Government Buildings on the night of the guarantee and had “a personal chat with him” but there was “nothing about the issues”.

Gleeson said that AIB representatives were not present in the room when the decision to issue a blanket guarantee was made and said he was not aware of this having happened when he left Government Buildings in the early hours of 30 September.

He said he became aware through the media early the next morning.

A ‘slip of paper’ or a ‘document’?

In exchanges with Pearse Doherty and committee chair Ciaran Lynch, Gleeson referred to a “slip of paper” that sketched out “the scope of the guarantee” and “the sort of guarantee needed to reassure depositors”.

Gleeson said the note was brought to the meeting with government officials on 29/30 September. Lynch noted that this “document” was not in AIB’s records. Gleeson said he believed it was left at the meeting.

Gleeson earlier said that AIB’s lending practices were impacted by Anglo’s.

He said that commentators repeatedly said that Anglo was the best bank and people asked: “Why can’t you be more like Anglo?”

I don’t think we were mirroring their [Anglo's] practice, but we were staying with them longer than we should have done.

Gleeson was also asked why €270 million in dividends were paid out by AIB on 26 September 2008 – four days before the guarantee.

He said that the decision had been taken the previous June, but that it was a mistake.

Yesterday, NAMA chief executive Brendan McDonagh revealed how he and other officials form the National Treasury Management Agency were kept outside of the room where negotiations were taking place.

He recalled his surprise at being informed at 1am on 30 September that the government had decided to guarantee all assets and liabilities of the six main financial institutions.

Gleeson was asked if he was surprised that NTMA officials were not consulted on the night of the guarantee. He responded: ”Nothing surprise me anymore.”

READ: Did the banks get ANOTHER bailout ‘by stealth’ – to the tune of €10 billion?

Your Voice
Readers Comments