This presentation discusses Anglo Irish Bank’s early days and its move into the property and developer niche. It covers the ‘relationship banking’ model where Anglo worked with developers during the day and entertained them at night. The story developed as we moved into the boom years caused by access to cheap funding through being in the Euro and the rise in house prices. Following the crash and the infamous night of the bank guarantee Simon outlines what the bank bailouts are costing the State, and also details some of the dubious practices since uncovered that the bank was using to try and cover up its problems. This talk was part of 'The Irish Economy. What happened? What next?', a series of talks held at Dublin City Libraries during March 2012. https://soundcloud.com/dublincitypubliclibrary/sets/the-irish-economy-what

1. Anglo Irish Bank and the part it
played in Ireland’s economic collapse
Simon Carswell - Finance Correspondent, The Irish Times
Author – Anglo Republic: Inside the Bank that Broke Ireland
Central Library, Ilac Centre – March 29th, 2012

2. Anglo: a brief history
 Founded in the 1960s but later merged into City of Dublin Bank
 “Little Anglo” takes over parent; Anglo name appears on market in 1987
 Anglo takes over Irish Bank of Commerce, the bank of property developers
 The bank supports developers/builders when AIB/Bank of Ireland doesn’t
 Property market starts to take off in late 1990s/early 2000s - Anglo wins
 Anglo “joined AIB and BoI for breakfast, then started eating its lunch”
 The other banks try to keep up – “herd mentality” and “groupthink” (Nyberg)

4. The boom – house prices quadruple

5. The boom – number of new houses soar

6. The boom – Anglo’s profits (1986-2007)
(but the bank failed to set aside enough cash in reserve!)
1,221
Profit Before Taxation (€m)
850
615
504
347
261
195
134
89
31 38 57
1 2 3 4 8 8 9 12 18 24
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Anglo’s annual reports 2006 2007
Source: 2003 2004 2005

7. Booming profits, happy bankers

8. The boom – Irish bank lending soars

9. The boom – Anglo’s growth (1993-2008)
Anglo Irish Bank loan book (billions)
80
70
60
50
40
30 Anglo Irish Bank loan book (billions)
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Source: Bloomberg

10. The boom – Irish bank borrowing soars
Source: Central Bank

11. The crash – Anglo’s erstwhile new HQ

12. The crash – the market turns…..
Source: Department of Finance, NTMA

13. Bank bailouts – total cost to State €63bn
Source: Department of Finance, NTMA

14. The crash – deposits leave, central banks step in

15. The fall-out… arrests and investigations…

16. The fall-out… the end of Anglo Irish Bank…

17. Thank you