From top: Valartis Bank, purchasers of Anglo Austria; David Drumm (left) and Sean Fitzpatrick in 2005.
We didn’t have to wait long following the Panama leak to hear of an Irish connection.
Anne Marie McNally writes
Panama papers, tax havens, connected billionaires and a hidden money trail across the world. Is this the stuff of the latest suspense novel or an actual unfolding news story with implications for citizens across the world?
Surprise surprise it’s a true story – the stuff we of the 99% brigade have pretty much come to expect from those up there in the 1% brigade. But come to expect or come to accept?
I fear it’s increasingly become the latter as many shrug their shoulders and think ‘sure we know that’s what they’re up to, it’s no big deal.’
In the current US Presidential race we’ve two significant, and not untarnished, members of the 1% club running for the office of President.
Hundreds of thousands line up at rallies to support them despite knowing what they know about their shady financial affairs that have been designed to screw the ordinary Joe Soap while they accumulate millions onto their billions by avoiding the taxes that would pay for the services they claim to be campaigning for.
Even less surprising was that we didn’t have to wait long following the Panama leak to hear of an Irish connection.
Even if we leave aside the two Irish individuals- a former senior Fine Gael strategist and a well-known developer – we are still left with the fingerprints of toxic Anglo all over.
According to the papers Anglo Austria was recommended to customers by the now notorious Panama law firm Mossack Fonesca as one of a small number of banks with ‘fairly relaxed conditions’ when it comes to setting up offshore companies designed to facilitate wealthy individuals to disguise their ownership and control of significant assets.
This is the same Anglo through which the infamous Bernie Madoff channelled his ill-gotten funds in order to finance his lavish lifestyle.
As far back as 2013, Simon Carswell, writing in the Irish Times, was telling us that Anglo Austria had actually been soliciting business from a company known for setting up offshore trusts.
In 2006, while the branch was still under the control of the Irish operation, a senior official in Anglo Austria was sending emails to the Singapore based Portcullis Trustnet appraising them of the ‘smooth and quiet’ nature of Austria’s banks and praising the culture of banking secrecy.
Says a lot about the internal culture at senior levels within Anglo doesn’t it?
Anglo sold it’s Austrian subsidiary to a Swiss based company in 2008 with the deal being signed on the day of David Drumm’s resignation, which had come the day after the Chairman, Sean Fitzpatrick, had been forced to step down because of his failure to reveal the extent of Director loans – which ran into the millions- within the organisation.
At the time of the sale that bank had €600 million in assets yet it was sold for only a €49million profit, with the bank itself financing part of the sale costs by way of a loan to the purchasers, Valartis.
The circumstances of the sale drew whispers across the financial world from those in the 1% circle with more than a few rumours that David Drumm had been worried about how it conducted its business and the possible blowback on him and the Irish operation.
Sean Fitzpatrick had apparently made the decision to sell the branch – with its €600 million in assets – mostly liquid cash deposits, at a time when Anglo in Ireland was in desperate need of deposits and was about to be bailed out by the Irish people to the tune of €24 billion.
The Board of the Anglo Austria operation included eight people from Anglo’s Dublin operation – a number that far outweighed the Board’s Austrian contingent.
With that level of Board representation you’d have to assume there would be an overlap of information between the Irish situation and the Austrian branch which causes me to repeat the questions that were whispered at the time – why sell off a branch with liquid assets at a time when you were shoving the begging bowl into Irish people’s faces and forcing them to flay themselves on your alter?
The initial Panama reports indicate that there may now be an answer to that question, and it undoubtedly won’t be a pretty one.
Anglo the Musical? More like Anglo the never-ending saga of disrepute.
Anne Marie McNally is a founding member of the Social Democrats. Follow Anne Marie on Twitter: @amomcnally
So you didn’t get elected Ann-Marie.
Move past it.
Insightful commentary waffles
Your name sums you up perfectly.
* knock knock *
Hello, McFly, you appear to be talking to yourself, everyone else it seems has moved on.
waffles by name…………..
I love how Irish people just shrug their shoulders when they get ripped off. Whether it’s a dodgy car, paying the (Insurance) gambling debts of Sean Quinn or a €64 billion bailout to a corrupt bank it’s always the same attitude.
The Brits sure left some legacy in this Country. A population of sheep.
Do you have even an inkling of how dense this comment makes you look?
What a total cretin.
I don’t always agree with her but she had the guts to stand for election.
So did CJ, Bertie, Jarry and Enda Kenny.
Fine but dismissing a piece because the author stood for election & was not successful on the first attempt is perverse.
Also putting Kenny (wooden & unthinking as he is) in the same boat as the overtly corrupt is part of the problem.
We should be able to do much better than Kenny but he in turn, is much better than CJH.
Neither of those points have anything whatsoever to do with your original point.
You’re original point was that she had the guts to stand for election. Many others both good and bad had the guts to stand for election.
Can we lock anyone up yet? …or are they still slipping through legal loop holes all over the place.
If you google ‘loophole’ on its own, then example for the first meaning is: “they exploited tax loopholes”
Nope. Still all legal.
“At the time of the sale that bank had €600 million in assets yet it was sold for only a €49million profit…
…Sean Fitzpatrick had apparently made the decision to sell the branch – with its €600 million in assets – mostly liquid cash deposits, at a time when Anglo in Ireland was in desperate need of deposits and was about to be bailed out by the Irish people to the tune of €24 billion.”
Anne Marie, step away from the edge here. Look up some “banking 101 – assets vs liabilities, valuations” study notes before commenting further on this. An enormous banana skin awaits otherwise.
Can you explain to me. Thanks :)
Well, deposits aren’t assets for starters. They’re liabilities. Loans are assets. Its a common mistake people make. Also, if a bank has “600mn in assets”, it also has just under 600mn in liabilities (there’ll be some small bit of equity). Again, a common mistake people make. There’s absolutely nothing wrong with selling a “bank with 600mn in assets for just 49mn in profit”. Example: Bank of Ireland has assets of around 130bn. Its has liabilities of around 120bn. It has a market value of around 8.5bn.
Cheers for that Owen C
The sale of Anglo Irish Austria is certainly curious, though not quite at a conspiratorial level. Although it had deposits, it also had assets that needed to be funded, so the loss of deposits was offset by the sale of the assets, ie these did not need to be funded anymore. Now, if the assets were actual “liquid assets” (again, this term is used horrifically incorrectly in this context by Anne Marie: liquid assets are high quality and easy-to-sell government or corporate bonds), that would make the sale by Anglo quite unusual, but the casual assumption is that the assets were in fact loans to their clients, at least for the most part. We have no information to suggest otherwise. As such, the sale of Anglo Austria may well have been a simple deleveraging exercise of decent quality but illiquid assets (loans to private clients), which came at the expense of losing stable deposits as well. But it also released a “profit” of 49mn (we’ll assume vs book value on Anglo’s balance sheet), which also would have been a help to the bank at that time of stress and eroding capital base. Like i said, it was certainly ‘curious’, but no more than that.
Thanks again Owen C.
I think I’m ready for my exam* now :)
(* that’s a joke Waffles, just so ya know)
I think it’s time you began a column on broadsheet Owen, you’re comments are always informed and well though out, and they tend to cut through the hysteria and faux outrage
Not here to educate you.
It’s just as well that someone has already explained it, huh? You needn’t trouble yourself.
C’mere ta me Waffles……
*slaps Waffles over the back of the head, and gives him/her a kick in the arse*
I’ve got yer back Clampers. I’ll gouge his soul out with a spoon…
Bit too much for a Wednesday morning?
only if you tinkle in the cavity left behind, mildred
That’s the classy option :D
No one saw an’in Clamps, slap away.
* hugs *
So Anne Marie doesn’t know what she’s talking about.
Could you not have wheeled out someone better to talk about the panama thing?
You mean Mercille, of course.
Ha! You’re getting the hang of this ; )
I’d like to be able to respond in real time but I’m on the naughty list for the last few days.
Rotide, just change your email address. I accused BS of being a tad “loose ” ( well, slutty was the actual term used) with their postings and they put me on the naughty list.
not sure if I’m arsed to be honest. I mailed them asking what the problem was and no response.
Well now that’s just rude.
I could Rotide
But I’m not
AFAIC Criminal Assets bhiys should be on it
( see that Anne Marie, Bhiys, they run the show there too)
Tax evasion and assisting Tax Evasion is considered Money Laundering. Get those lazy hoors in CAB to do it.
“Sean Fitzpatrick had apparently made the decision to sell the branch – with its €600 million in assets – mostly liquid cash deposits, at a time when Anglo in Ireland was in desperate need of deposits and was about to be bailed out by the Irish people to the tune of €24 billion.”
I called them ‘liquid cash deposits’ as in, there was physical cash in the accounts. This is relevant because those deposits could have enabled the bank to fund new lending thus generating revenue. The fear of a ‘run’ on a bank, i.e: people withdrawing their deposits, is a fear for a very good reason – it essentially makes the bank defunct. So at a time when Anglo Dublin desperately required deposits it sold off a branch that was weighed down with them. That’s why the financial world at the time (read many financial journalists around the time of the sale for proof) thought it an odd move and it was roundly mooted that Drumm was terrified enough of what was under the covers in Austria that he had to let it go despite the nonsensical financial element of the deal.
Hope that makes sense but thanks for the mansplain and the fear that the little lady may not have understood the big bad financial world!
I missed the casual sexist slight from Anne-Marie earlier. For crying out loud Anne-Marie don’t cry ‘mansplain’ just because you’ve been corrected by someone.
#EverydaySexism brought to Broadsheet by the SocDems…. Very disappointing Anne-Marie, incredibly so…. I’m not a happy SocDem supporter.
Would you go way out of it.
Anne-Marie mightn’t be aware that Owen is equally condescending regardless of gender..
Here he was chastising me and (Ahjazis originally) when when he didn’t go to the bother of listening to the show in question –
” I’d suggest you should do better.”
““but if we’re going to reference him, lets at least reference what he actually said.”
Hadn’t even bother to listen to what Stephen Donnelly said, but felt it appropriate to lecture someone.
I find this incredibly condescending..
“Anne Marie, step away from the edge here. Look up some “banking 101”
Owen has questioned the percentages of discounts that Nama have given on loans and when I’ve gotten them, he doesn’t reply. Not that it’s all that difficult. Any article on Nama is giving information on the discounts the vultures have received.
Stephen Donnelly is right in Owen’s reckoning in one instance..when he’s given the information of what Stephen actually said (based on verified information Stephen received), Stephen has it wrong somehow.
Fair points Anne !
Yeah, I’m with you there actually.
I love Anne-Marie and she’s totally gonna be best woman at me and Gary’s wedding, but that’s out of order.
How is shutting down a man for disagreeing with a woman with the mansplain line any different to telling a woman disagreeing with a man to never mind her pretty little head? Bad form.
I saw Gary on a bike the other evening –
I thought of you, bizarrely enough :)
Was he in shorts? Was your camera broken or something?! Get with it, Bertie
Mansplain? Little lady? You probably need to be careful here. Casual claims of sexism are not a good idea. I’ve had to “mansplain” this to men and women before. If you think you’re being singled out as a “little lady”, then i suggest you have a harder think about it.
So, lets go back to Anglo Irish Austria – someone paid 141mn for the bank. Do you think this was just for a deposit franchise? Was there other elements of what they did there, like lending, asset management, wealth advisory, private banking etc? Did “Anglo Irish Austria” have any other assets that needed funding? Or did they lend the 600mn straight to Anglo Dublin?
Here’s what we do know:
“The Austrian private bank contributed 1% of Anglo’s pre-tax profits and had net assets of €76 million. Anglo says the sale, which will be accretive to Anglo’s capital base, follows the successful disposal of Anglo’s Isle of Man trust operations in 2006 and of its Swiss private bank earlier this year. It says the move is consistent with Anglo’s strategic focus on its core secured lending businesses in Ireland, the UK and the US together with its complementary global treasury business and its Irish and UK wealth management businesses.”
So, as follows:
1. In 2006, long before “trouble” started, Anglo sold off its IoM operations.
2. Anglo sold off its Swiss operation in early 2008.
3. Anglo continued with a move “consistent with their strategic focus” on Ireland, the UK and US by selling off their Austrian operations in 2008.
Annemarie , hold off on playing the sexist card. He called you up on your classification of deposits as assets which is incorrect. Your gender is not an issue .It is not important. He would say the same to Mercille. Your constant play on your gender is irritating and does a disservice to women. Argue on facts not gender. That is equality. That is feminism .
I had some respect for you
I work in the Financial World
And what you have just posted there is exactly why I have to be ten times better and work ten times harder than the lads
There are as many lads, if not more, as “little lady” gobsh1tes that can interpret Financial Statements
I don’t get to use the Ladies Tee box in my game
I don’t get Ladies rates for Professional Indemnity
You should be ashamed of what you just posted there.
That should say “can’t interpret Financial Statements” BTW
I’m that p1ssed off with you Anne Marie
I’m úçking beside meself
I think you’re overdue a visit from the karma police..
Tomorrow, tomorrow.. you’re only a day away..
Oh fupp.. it’s only Wednesday.. nevermind.
You are absolutely 100% right Frilly. SF supporters are the renown experts in international banking.
I have to agree with what the others are saying, Anne Marie. I did a double take when I saw what you had written. I generally enjoy your column, and find them intelligent, well written, and easy to read. Your dig about’mansplaining’ (I hate that word) is beneath you, you’re much more intelligent than that, you know it.
I’m hoping you were simply having a bad morning and it affected how you responded. You’d hardly be the first to have that happen. I’m gonna give you the benefit of the doubt here, and hope you have your customary poise back for next week.
Let’s all jump on the bandwagon….
That’s the spirit!
Finance professionals themselves only understand sections of it. Same way you can’t have a surgeon that can do all types of operations. I’d take it easy on responding to competence challenges.
If we are hurt by financial/taxation policies, we are within our rights to express dissatisfaction and engage in investigations, lingo or not. It does not place a burden of learning industry concepts and terminology on us, But it places burden of failed duty of care onto the professionals involved.
Hope that makes sense but thanks for the mansplain and the fear that the little lady may not have understood the big bad financial world!
Wow. just…. wow.
I guess you didn’t get elected because you were a woman as well?
Someone made a well-reasoned correction of your poor analysis of a situation; I don’t think that any sexism was implied, but nice to know that you will go straight for the low-blow when someone calls you out on your poorly-researched articles.
Wow, I actually thought you had a brain. You clearly don’t. Bye bye Ann Marie, from someone who takes gender equality seriously.
Where do you buy your lubrication?
What’s it called again, ‘Obfuscation’ by Chateau de FF?
I would love to be able to shaft people with your ease.
I’m surprised that Anne-Marie is continuing to describe deposits as an “asset” of a bank. When you lodge your savings into a bank they are ‘your’ savings and the bank owes them back to you. Therefore they are a liability of the bank, not an asset.
You know *your* savings are *my* mortgage, right? That’s how it works. They take in deposits and lend them out as loans.
Thus creating an asset and a liability.
No they don’t! If that were the case, the Viper could call himself a bank.
Banks lend money based on the creditworthiness of individuals seeking the loans. Deposits, as Owen C and others have pointed out earlier, are liabilities, ie money owed to the depositors on demand.
Banks do indeed lend money based on the creditworthiness of the applicant. But you know they can’t actually print their own money, right? They can’t create money?
What money are they lending out then?
They’re lending deposits.
This is the basic tenet of banking, and why it’s a crisis if everyone wants their savings at the same time – a bank run – as they don’t have it, it’s been lent but for a small reserve.
Banks kind of do create money – they can lend a multiple of the money that has been deposited in the bank.
Ahjayzis (and others):
Please Google a Bank of England Quarterly Bulletin from Q1 of 2014, entitled “Money creation in the modern economy”.
Read the whole thing if you want, but the first page provides a simple overview, and helps puncture myths concerning how banks lend and what they lend out.
Private banks absolutely do create money out of thin air by lending. That’s how ‘new money’ is created. This concept is wildly misunderstood.
The simplistic, incorrect, perception is that banks take in deposits and then lend them out.
In fact, loans create deposits.
Always kind of amusing to see *deep breath* followed by something factually incorrect.
Hello. Bank loan classified as asset.
You have your Financial interpretation arseways Anne Marie
From what you’ve presented above Anglo did well to get 49 mill for that subsidiary
Maybe the electorate did the SDs s favour
the article was going so well, hitting all the keynotes, the 1%, Trump, bailed out bankers until it got hoisted on its own petard by attempting financial analysis and ‘facts’
stick to the usual stuff of reform, whispers of corruption, our nice new purple colour – much safer ground. Keep the sexism card in the back pocket until you are actually right too, much more effective
Reading the comments here looks like a massive own goal by Ann Marie. Oops!!
Bad day at the office Anne-Marie, on a couple of fronts. Happens the best of us from time to time. Take it away and grow from it.
Still one of the most readable contributors on here. We all have an off day or we take someone up the wrong way.
Anyway – Anne-Marie if a new election gets called soon(ish), I hope you decide to run again.
I see others have already pointed out the myriad of flaws in this article & the subsequent response to Owen C.
ElZilcho & Dan M with the pertinent information.
Woeful attempt to jump on the Panama bandwagon.
The real issue, was not the premptive sale to protect the 600 million from a
meltdown in Dublin and to save the depositers, and more to the point who
were they, did they know about the liquidity of Anglo in Dublin, were they “insiders”.