THE FORMER BANK of Ireland (BOI) chief executive Brian Goggins has told the banking inquiry that the 29 September 2008 was the worst day of his life.
Addressing the committee, Goggins said:
The day and night of 29 September was the worst day of my life. The pressures, the stress, it was traumatic.
In his opening statement he explained he had been in banking for 40 years. He said the bank’s strategies on risk did not foresee what was coming for the banking system.
I deeply regret this failure and its consequences.
I am very sorry this ultimately happened on my watch.
Anglo’s situation was “perilous”
Bank of Ireland would not have needed a bank guarantee that night had it not been that Anglo Irish Bank was about to collapse the next day, he said, describing Anglo’s situation as “perilous”.
When he heard the news about the possible default of Anglo, he said it was a “grave piece of news”.
He also told the committee that he has no recollection of the drafting of a guarantee or having a piece of paper with him that night, as was recorded in minutes of the meeting.
He said the minutes were incorrect.
Describing the meeting of bankers on 29 September 2008, he said that AIB and BOI were asked to if they could supply €5 billion each.
He said he left the room to consult with his colleagues and decided they could post collateral and come up with the €5 billion, but they “didn’t have it on the spot”.
BOI and AIB
“It was very clear to us the government was not minded to intervene at all” in the early part of guarantee discussions, he said.
“They expected Bank of Ireland and AIB to provide a solution.”
Returning to the room at 2 am, Goggins said both banks could produce the €10 billion, with AIB stating it could do it in the course of the week too.
“The mood of the room changed… there was a palpable sense of relief… at that juncture we were informed of the government guarantee of all banks.
Goggins said he was under the impression the Taoiseach at the time Brian Cowen and the Minister for Finance Brian Lenihan, were aware of the gravity of the situation.
He said the night was a “fraught occasion”, but that the Taoiseach was “very much in charge”, stating that he was chairing the meeting.
Saving the banks
Goggins said he went in to the meeting stating that the situation with Anglo and Irish Nationwide had be dealt with as it was having a “contagion effect” on the other banks. He also said he believed a guarantee would be needed “for a period of time” to provide stability.
He said they arrived for the meeting at 9.30pm, were called in at 11.30pm and bar one meeting where officials met and when BOI went out to discuss if they could find the €5 billion to keep Anglo afloat, BOI and AIB were in the same room.
He said he left the meeting with the full understanding that the bank guarantee would include all six banks.
“When I left at 3.30am, there was no ambiguity about what was being done on that night. A blanket guarantee.”
Lobbying
He also told the committee about a conversation he had with the former Central Bank Governor in the summer of 2008 – in June or July – when he was told there was “lobbying for a system-wide guarantee for all the banks”.
When asked what he thought of such a suggestion, he said:
“It was mentioned it to me in conversation, he sought my view. My view was quite direct. We didn’t need a guarantee and I did not support the concept.”
Pay
The pay of the chief executive was also up for discussion. Goggins earned up to €4 million and admitted he was paid “exceptionally well” . He said that his remuneration was decided by the board and he had no input.
He declined to tell the committee what his pension was stating that it was a matter of public record.
Speaking about the bank’s lending practices, he said the bank made a judgments that it “generally believed were on solid ground”.
He added that the judgments BOI made were “always done in a considered fashion and in good faith.” State support in Bank of Ireland “profoundly instrumental” in its recovery, Goggins said.
The former chief executive pointed out that in comparison to other banks in the market at the time BOI was “conservative” in its lending strategy.
He outlined to the committee that Bank of Ireland was not disproportionaly exposed to property during the boom. At the time, 44% of loan book was accounted for by residential mortgages.
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