Balance sheet management or "window dressing" were interchangeable terms for a known industry practice, a former senior accountant with Anglo Irish Bank has told a trial.
Four former senior bankers from Anglo Irish Bank and Irish Life and Permanent (ILP) are alleged to have conspired to mislead investors by setting up a €7.2 billion circular transaction scheme to bolster Anglo's 2008 balance sheet.
Peter Fitzpatrick (63) of Convent Lane, Portmarnock, Dublin, John Bowe (52) from Glasnevin, Dublin, Willie McAteer (65) of Greenrath, Tipperary Town, Co Tipperary and Denis Casey (56), from Raheny, Dublin have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions between March 1st and September 30th, 2008.
On day 44 of the trial, Ciaran Cunningham, who was senior manager with Anglo's Treasury Finance department, began giving evidence of how he and his department team had dealt with how the €7.2 billion transaction would be treated in the bank's balance sheet.
‘Managing a snapshot’
Asked by Úna Ní Raifeartaigh SC, prosecuting, what he understood by the terms window dressing, balance sheet management or “managing a snapshot” the witness said it normally referred to short-term transactions done over the reporting period for a bank.
He said the terms were used interchangeably. He said the €7.2 billion transaction with ILP he was "cash neutral" and this meant that it didn't generate any new funds or liquidity.
Asked was there any commercial substance to it he replied: “Balance sheet management”. He later added: “The primary substance was to manage the snapshot”.
He told Roisin Lacey BL, defending Mr Bowe, Anglo’s then head of capital markets, that balance sheet management was something that was known in the industry.
He agreed that it may include overnight placements which would be reversed the next day and that this was not unusual. Ms Lacey put it him that there was nothing untoward about balance sheet management and the witness replied: “The practice existed”.
Counsel put it to him that it is also known in the industry as “the calendar effect” and “putting on your best suit for the photograph” but the witness said he hadn’t heard of those terms.
The trial continues before Judge Martin Nolan and a jury.
