Round & round the garden, like a teddy bear
So just how much money do Irish banks have on deposit?
This is the question which arises as a result of the disclosure yesterday that the Financial Regulator (motto: hey, better late than never!) and the government-appointed auditors are investigating transitory deposits at Anglo Irish Bank.
It has emerged that Irish Life & Permanent deposited €7 billion with Anglo Irish Bank shortly before Anglo’s financial year end, then withdrew these deposits immediately after the year end, roughly 10 days later. This amount equates to roughly 8% of their total deposit base.
What this does is make the bank’s deposit-to-loan ratio look healthier than is actually the case, as it entirely misrepresents the hard cash carried by the bank.
According to IL&P:
During a period of unprecedented turmoil in global financial markets there was an acceptance that financial institutions would seek to provide each other with appropriate support where possible
It is absolutely disgraceful that the directors of the bank carried on this sort of behaviour, and for the auditors of either bank to claim that they had no knowledge of the activity is beyond belief. For the record, Ernst & Young who are Anglo’s auditors have already disavowed knowledge of similar shady practices by Sean Fitzpatrick, the former Chairman. The auditors to Irish Life & Permanent are KPMG.
One has to wonder just how many other banks have availed of this back-scratching relationship. It is scary to consider how badly this sort of banana-republic banking will affect our already seriously damaged reputation globally.
