Michael Somers on Anglo Irish Bank: “they weren’t essential for normal day-to-day banking”

At the Guardian’s Ireland Business Blog, Lisa O’Carroll spots another wrinkle in the Anglo Irish Bank saga

[Michael Somers, the former head of the NTMA] is a bit like the governor of the central bank, Patrick Honohan, when it comes to media. Composed, mild-mannered and long on integrity. In short, a credible witness.

Somers explained that the NTMA had, at any point, between €5bn and €10bn to place among 100 banks around the world. Anglo only got €40m of that, compared to AIB and Bank of Ireland which got €200m.

We probably looked more favourably on AIB and Bank of Ireland on the basis that they were systemically important to the Irish country, that the country couldn’t get on without them. Now we would have taken a somewhat different view of Anglo. [added emphasis]

“We didn’t regard it as being in the same league as the two Irish institutions, they weren’t essential for normal day-to-day banking, you didn’t get your salary paid in there, if you wanted a mortgage for your house you didn’t go near them.”

So in short Anglo Irish was not of SYSTEMIC (my capitals) importance to the country.

That’s completely at odds with the view Brian Cowen and Brian Lenihan took back in September 2008 when they issued the blanket guarantee after Anglo became near insolvent – that Anglo Irish was of “systemic importance” to the Irish economy and had to be saved.

, , , , , , ,

  • Cynic2

    Depends on your perspective. Are you seriously suggesting that if they had just allowed Anglo to fail the impact would have stopped just there? Once one that size defaulted it would have been systemic

  • aquifer

    Depends on your perspective, and Brian Cowen’s FFail was so close to senior figures there that it looked to be a very big and important bank. To others it was only for lending to big developers, and to its own directors it seems.

    After the initial financial shock, Anglo might have been allowed to fail without affecting the creditworthyness of the Irish government very much, and might have increased it.