Twenty four hours ago, I posted the early details of the evolving Anglo Irish Bank story, the resignation of chairman Sean Fitzpatrick and brief details of loan movements which led to his decision.
Since last night, chief executive David Drumm has also resigned, as has non-executive director Lar Bradshaw.
Gavin’s Blog asks some questions about the timing of Fitzpatrick’s announcements, and the various investigations and inquiries.
The current Phoenix also takes a look at the Bank, and it doesn’t make for comforting reading. Under the heading ‘Anglo Irish Bank now technically bankrupt’, the article outlines the bank’s fall from grace.
Shares which traded at €17 in April 2007 closed this evening at 35c. One hundred percent of its loans are secured on commercial property investment and development property. In addition, the bank loaned money to businessman Sean Quinn, which he effectively then used to buy shares in the bank.
Perhaps the most relevant observation came from Shane Ross, who said: ‘There’s a serious question has to be asked about the financial regulator. It is absolutely plain that the regulator knew about this much earlier this year – it appears he knew in January. What is the financial regulator doing?’
the bank loaned money to businessman Sean Quinn, which he effectively then used to buy shares in the bank
Goodness. Wouldn’t that constitute illegal financial assistance? I think it would do, in most if not all EU jurisdictions. Had that happened in Germany, Quinn and the bank would’ve been quite soundly spanked. More to the point, I think Quinn might then be on the hook to contribute capital to the bank in its time of need. (Admittedly I know more about that sort of thing in the context of the hidden contribution in kind, which German corporations are in danger of accepting unknowingly about ten times a day. I think even the crookedest robber barons in the country, though, wouldn’t dream of buying shares in a company with money borrowed from the company itself.
A couple of Googled pages to give you some background.
First, the Herald explains how Sean Quinn received a €288 million loan from Quinn Insurance. This money in turn was used to buy CFDs (contracts for difference) which were later converted to shares in Anglo Irish. The article also lists some questions about the transactions.
This article from the Indo notes that Quinn ‘certainly knows Anglo Irish Bank operations well. He is a major customer of the bank, with Companies Office records showing Quinn companies being financed through Anglo loans.’
And finally, the Irish Times gives some details of the fallout, as both Quinn and Quinn Insurance were fined by the Financial Regulator for ‘breaches related to contraventions by Quinn Insurance Ltd of obligations under the Insurance Acts and Regulations, including failure to notify the Financial Regulator prior to providing loans to related companies.’
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