- Day ten of the Anglo Irish Bank trial at Dublin Circuit Criminal Court
- Former chairman Seán FitzPatrick and former executives Patrick Whelan and William McAteer have pleaded not guilty to providing unlawful financial assistance to 16 people to buy shares in the bank
- Mr Whelan has also denied seven charges of being privy to the fraudulent alteration of a loan facility letter
17.00 Continuing with his evidence before proceedings finished for the day, Mr Moran told the court that Mr McAteer told him that the bank planned to provide loans to customers to buy shares in the bank.
He said that on the morning of 9 July 2008 he and Fiachre O'Neill met Mr McAteer.
He said Mr McAteer outlined the plan to approach clients of the bank and ask them to take on up to 13% of the Seán Quinn CFD position and for the Quinn family to convert the rest of the CFDs to actual shares.
"He explained that the bank would provide lending to those clients and that loan would be of 25% recourse," Mr Moran said.
He said that later in the week Mr Drumm told him that he had received the approval from the Financial Regulator.
"He had spoken to the regulator about the transaction and he had got their approval and he gestured to me a thumbs up," he said.
The trial has ended for the day after barristers Paul O'Higgins SC, for the State, and Brendan Grehan SC, for Pat Whelan, clashed over an issue around Mr Moran's evidence and references to Mr O'Neill.
The jury heard that Mr O'Neill will not be called as a witness for the prosecution. Judge Martin Nolan then sent the jury home shortly before 4pm.
16.00 Mr Moran has told the court: "During 2007 there was a lot of noise in the market about Mr Quinn having a potential holding or interest in the bank."
He said the rumour was that it was held in a CFD or derivative position rather than a real shareholding.
He explained to the court that the equity of a bank – the amount of money raised through shares – is the foundation on which a bank is built.
In order to lend money the bank must have a certain percentage of equity. He said: "If you have ten billion in loans you had to hold four hundred million in equity."
He said the regulatory requirement at one stage was four per cent but that the market would "demand" higher equity. He said that in 2006 the bank raised €400m through shareholders and €500m in 2007.
He said the loans were not connected to the equity and the money loaned out came from other sources, such as funds raised from senior depositors, debt investors and the markets.
He said by 2007 the global financial crisis meant that it was becoming much harder for banks to raise this money.
He said that the collapse of the subprime mortgage market in North America left funding concerned about putting money in the subprime market and later about putting money in banks.
15.30 Proceedings in court 19 were delayed again by a barrister request and did not resume after lunch until 2.30pm.
Matt Moran, the Chief Financial Officer of the bank in 2008, is being questioned by Paul O'Higgins SC, for the Director of Public Prosecution (DPP).
Mr O'Higgins began by telling the jury that Mr Moran has been granted immunity against prosecution for the purposes of matters for which this trial is concerned and in respect of any other matters that may be the subject of prosecution.
Mr Moran agreed this was the case and came about after discussions with his legal representations and the DPP.
"I'm not suggesting you are guilty or not guilty of anything," counsel told Mr Moran.
Mr Moran said he had a background in corporate finance and joined Anglo in 2002. He reported to Willie McAteer.
He said he dealt with investor relations, and one of his jobs was "to market the story of the bank".
He also was charged with building the group finance of the bank.
13:14 Declan Quilligan, an executive director of Anglo in 2008, has told the trial that he was surprised and uncomfortable with the reaction to the Quinn/Maple Ten transaction in 2009.
He said for the bank to ignore the issue of Seán Quinn's large shareholding and the hedge fund attacks it was attracting could lead to "catastrophic" results for the Irish financial system.
"To do nothing wasn't an option. We went through all the other options. There was such fear in the market. Banks were falling over. Building societies were falling over. We ran out of options. To do nothing was never an option.
"If we were to do nothing, Quinn's CFD position would have had to be unwound in an uncontrollable way and the risk to the Irish banking would be catastrophic".
The jury were shown a copy of an email sent from David Drumm to Mr Quilligan on 9 July, days before the Maple transactions were executed, with the subject title “Regulator Squared”.
Mr Quilligan's one line reply was also shown in which he wrote "excellent hope he was grateful".
Explaining this email in court, he said: "That probably reflects the benefit to the regulator of what was being done here now."
He said he believed the Maple transaction was carried out to stabilise the funding to the bank, which was a regulated entity in the Irish financial system.
He said if Quinn Insurance, another regulated entity, brought down another regulated entity, this would have a calamitous effect on funding for the entire Irish financial system.
He said: "A pension fund manager in Germany wasn't going to hang around to see if his deposit in another Irish bank was ok."
He said an overseas fund manager would simply press a button "and the money is gone".
Asked if this situation could be summed up with the word "contagion" the witness replied: "It was to avoid a calamity".
A third email was shown to the jury, in which Mr Drumm replied to Mr Quilligan, writing: "Excited I would say. I think he's lying awake at night like the rest of us."
Asked what he would change about the transaction he said: "With the benefit of hindsight I'd like to have gotten it all in writing.
"Who was benefiting here - it was dealing with the problem Quinn had brought to our door. I wish with the benefit of hindsight we had got everyone signing off on that.
"The transaction occurred in July 2008. The first time I ever heard any discomfort with it was after the bank was nationalised. It felt like we had acted alone and we hadn't consulted and we hadn't taken advice and it felt that the whole story wasn't being told.
"There was a feeling of responsibility...it wasn't a comfortable feeling.
"I was quite surprised to the reaction to the Quinn transaction. I had understood everyone knew about it...six months later it was held out as an example of poor governance in the bank and I never felt that".
12.50 "A bit like that vote of confidence for the Premier League manager – as soon as you hear that it’s pretty much curtains" is how Lorcan Staines BL, defending Pat Whelan, describes the dilemma Anglo faced in 2008 regarding the "false" rumours being spread about the bank by hedge funds.
Declan Quilligan, one of the bank's chief executives, agreed, saying that if the bank came out and made a statement saying their funding and liquidity were strong, people would wonder why they were making the statement.
On the other hand, if the bank said nothing and allowed the rumours to run unchecked, market watchers would wonder why they were not denying the speculation.
Mr Quilligan testified: "It was very easy to unnerve people of the security of their deposit. I had been contacted by an investor that a couple of hedge funds were spreading untrue rumours about a bank.
"Myself and a colleague approached a hedge fund about it. But there was very little we could do about it. I think we reported it to the regulator."
He said they could go to hedge fund investors and complain that the rumours they are spreading are false and inaccurate, but the investors might go away from that meeting thinking "we've got the lads from Anglo in and they're rattled".
"If you met them you are showing weakness instead of strength."
12.45 The tenth day of the Anglo Irish Bank trial started at 11.10am this morning due to one of the barristers dealing with another matter in another court.
Declan Quilligan, who was chief executive of the bank's UK business at the time, has been telling the court about the options considered by the bank in 2008 to unwind the large Quinn Contracts for Difference shareholding.
He said that one of these options was to raise a rights issue in the bank, which would have involved offering shares to existing shareholders.
He said Seán Quinn did not go for this idea because he would not have been able to buy the shares himself.
"It would have involved him writing a big cheque. He didn't have a big cheque to write," Mr Quilligan said.
He explained that offering shares to existing shareholders would solve the problem of unwinding the Quinn position and also raise money for the bank.
The shares would be bought by long-term shareholders rather than someone who was going to lend out the shares and gamble on them going up or down.
He has told Lorcan Staines BL, defending Pat Whelan, that the CFD position had to be unwound because the share price was being attacked by hedge funds that were betting against the share price.
Mr Quinn's CFD meant that he had bet on the share going up so each time it dropped in price he lost money and had to go back to the bank for funding or risk default.
He said that he believes that the option of lending to investors to fund their purchase of shares "had always been kinda there".
He said: "It was always seen as an option but the least-preferred option."