Former Financial Regulator Patrick Neary and former chief executive of Anglo Irish Bank David Drumm had a "hotline" between them in July 2008, the Dublin Circuit Criminal Court has heard.

The court has heard details of a report into the unwinding of Seán Quinn's interest in the bank, compiled by Anglo's former head of Irish lending, Patrick Whelan.

Mr Whelan along with another director of the bank, William McAteer and the bank's former chairman, Sean FitzPatrick deny giving unlawful loans to 16 people to buy shares in the bank.

The court heard details of a report compiled by Mr Whelan, in late December 2008 and early January 2009.

The court heard the report, entitled "A Review of the Quinn Group and related transactions" had been requested by the then incoming chairman of Anglo, Donal O'Connor.

Mr Whelan told gardaí it had been put together over the Christmas holidays and was "rushed" and contained some errors. 

It set out a history of the bank's dealings with the Quinn group and Anglo's efforts to find a solution to Mr Quinn's gamble on the bank's share price through Contracts for Difference.

The court also heard details of an interview with Mr Whelan by gardaí in April 2010.

In his report, Mr Whelan said the bank was trying to find investors to take some of the shares between March and July 2008.

He said the decision to change the bank's strategy from placing some of the shares with institutional investors to placing them with individual investors was made by Mr Drumm in July 2008.  

He said he understood Mr Drumm and the finance team kept the Financial Regulator fully informed of the change and the Financial Regulator was happy with it.

Mr Whelan said ten individuals were approached to invest in Anglo shares and all ten agreed to participate.

He said there was absolutely no implied threat that the individuals' future applications for credit could be affected.   

He said he was not aware of the Financial Regulator raising any concerns about the funding of the deal to unwind the CFDs. 

He told gardaí that as far as he was aware, the Financial Regulator was aware of the deal and had approved it.

Mr Whelan said he was told by Mr Drumm, Mr McAteer and Matt Moran that the regulator was looking for updates and progress reports and asking why the deal was not happening quickly enough.

He said he recalled Mr Drumm specifically mentioning Mr Neary, the Chief Executive of the Irish Financial Services Regulatory Authority. He said they seemed to have a hotline between each other.

Mr Whelan said the bank felt uncomfortable asking the ten investors to be liable to repay 100% of the loans to buy the shares.

As there was a view that Mr Drumm had invited these guys to assist and they did not feel it was right to ask for 100% recourse.

He said he specifically remembered being with Mr Drumm when he took a call from Con Horan who was in charge of banks at the Regulatory Authority.

He said the call took place between 10 and 17 July 2008 and he recalled Mr Drumm mentioning some of the names of the ten individuals to Mr Horan.