ANGLO IRISH Bank was told in meetings with the Central Bank in the days running up to the bank guarantee in September 2008 that there was only €4 billion in the system to support the banks, sources close to Anglo have claimed.
The bank was told about the limited liquidity – cash to meet immediate repayments to depositors – in a meeting in mid-September, as the global banking crisis intensified, sources claim.The Central Bank said last night that it did not comment on emergency lending for specific banks.
However, the Central Bank disputes the claim and maintains unconstrained funding was available to individual banks with collateral, but not to the wider system. An Anglo spokesman said the bank could not comment as the issue related to the former management.
Unlike other banks, Anglo had no home loans that could be used as collateral to draw loans from the other funding source available at the European Central Bank. Anglo had sought loans from the Irish Central Bank after US investment bank Lehman Brothers went bust on September 15th, sparking a massive run on deposits.
A Department of Finance note shows that on September 21st the Central Bank felt the available liquidity pool needed to be bigger. The note details a meeting of Government and Central Bank officials the following day held to create “a war chest” from the bank and other agencies. It shows the Central Bank had €9 billion.
The note says the Central Bank didn’t want to lend Anglo €7 billion, as it had sought, “unless absolutely necessary”.
Anglo’s share collapse on September 29th and deteriorating funding led the Government to issue the system-wide guarantee, covering six financial institutions, as Anglo faced a shortfall of at least €1.5 billion the following day and could not have opened for business.
