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Anglo Irish Bank reels as bosses quit over loans scandal
Hugo Duncan19 Dec 2008
Investors in Anglo Irish Bank were left reeling today after its top brass quit in a loans scandal in which chairman Sean FitzPatrick used the firm as an €87 million (£81 million) piggy bank.
Its shares fell more than 40% to a record low of 19 eurocents after FitzPatrick and chief executive David Drumm stood down in a major embarrassment to one of the great success stories of the “Celtic Tiger” economy.
The dramatic resignations came after it emerged FitzPatrick loaned himself a total of €87 million from the bank over eight years but shifted the money to another bank to hide the payments.
“In terms of credibility it's just shocking,” said one London-based analyst, who speculated it could lead to nationalisation of the bank.
The scandal came as the Irish Government continued its €10 billion recapitalisation of the country's banking system with Anglo seen as the most in need of fresh capital.
The analyst said: “We think that the amount of capital that it needs to raise makes it increasingly likely this thing needs to be nationalised and this is just another nail in the coffin.”
Drumm said it was “appropriate” for him to leave given FitzPatrick's resignation and the continued support of the Irish Government.New chairman Donal O'Connor accepted Drumm's decision “with regret”.
FitzPatrick built Anglo from a tiny operation in the 1980s to a multi-billion euro lender and was chief executive for 18 years before becoming chairman in 2005. He admitted taking €87 million of loans, on normal commercial terms, from Anglo Irish between 1999 and 2007. Before each year end, he transferred the loans to another bank.
FitzPatrick said: “The transfer of loans between banks did not in any way breach banking or legal regulations. However, it is clear to me, on reflection, that it was inappropriate and unacceptable from a transparency point of view. I am fully responsible for my own decisions and actions and I regret that I had adopted this approach.” FitzPatrick, 60, took a €320,000 salary in 2006 and a €533,000 bonus.
He is also standing down as chairman of Smurfit Kappa and director of Aer Lingus, Experian, Greencore and Gartmore Irish Growth Fund.
Anglo non-executive director Lar Bradshaw quit along with FitzPatrick after the pair took out a joint loan. FitzPatrick insisted Bradshaw knew nothing of the transfer of the loan.
Reader views (5)
I think it is pretty clear that the European Governments, including the ECB, will do whatever is necessary to stop any further banks from imploding and therefore support Anglo if it is required (their recent results looked fairly decent). They have already learned their lessons from looking at the delay in reacting to Northern Rock, and the lessons to be learned from Lehman and Bear Sterns.
- Martin, London, 21/12/2008 14:05
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They are gangsters. Stupid. The frightening thing is, that there are many more, of the same ilk, out there, messing with your hard earned money.
- Jon Vickers, SC USA, 21/12/2008 13:35
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I would be frightened to ask these guys for my money back, they look like a couple of gangsters.
- Royston Amphlett, Bournemouth England., 20/12/2008 19:54
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But I'll wager not one penny of all the money
he's made will be claimed back.
- Chris, Woking. UK, 19/12/2008 18:01
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The interesting question is if the Irish Government are able to meet their undertaking to guarantee what is effectively the entire Irish banking system, and if the IMF would be willing to bail them out in the last resort.
- Richard, London, 19/12/2008 17:58
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