Very interesting article by Kathleen Barrington in today’s SBP (“The Curious Cae of Anglo Irish Bank and its Austrian Deposits”, Markets Page 3). It doesn’t say a lot beyond recounting the bald facts based on info in the public domain, but it is pregnant with innuendo. I’m sure we’ll have a link on it tomorrow, but for now this seems to be the broad outline of Barrington’s story:
Anglo owned a private Austrian bank for some period during the fake boom. 2001 is the earliest date in the article confirming Anglo’s ownership of this bank, so it obviously owned this subsidiary from some point in time before that.
Barrington says that this bank was important to Anglo’s depositing-gathering operation for many years - reflected in the fact that a board member of the Austrian operation was placed on the Anglo board in 2001.
On September 5 2008 Anglo announced that it was selling this bank to Swiss banking group Valartis. The sale was completed on December 19, 2008 - the day after Sean Fitzpatrick resigned as Anglo Chairman.
Barrington points out that 2008 would have been a very odd time to sell a deposit-generating subsidiary like this given the dire need Anglo had for cash at that time. The sale resulted in the loss of a large amount of deposit capital, Barrington asserts - a total of €600m according to Anglo’s 2009 Annual Report.
Indeed, it appears that Seanie was so keen to sell this Austrian operation that he even leant Valartis money to buy the business from Anglo.
What was the nature of this Austrian bank? Barrington says it had about 4,000 private customers managing about €1.6b for them. Moreover, this bank was subject to Austrian derogations from the EU Savings Directive such that the identities of its customers did not need to the revealed to the authorities. Privacy seemed to be the defining characteristic of the operation.
Barington’s money shot comes in one small para near the end of the piece and is related to this high level of confidentiality:
In the piece, the points Barrington seems most at pains to convey are the importance of the deposits to Anglo in 2008, the extreme confidentiality of the the Austrian subsidiary and Sean Fitzpatrick’s unusual anxiety to sell the business.