A former governor of Bank of Ireland has said the bank guarantee was not something the bank asked for and it was a government decision.
Richard Burrows said the bank did not go with a solution to propose to government, he said it went to government to make it aware of concerns and the seriousness of the situation.
Mr Burrows described the events of 29 September 2008.
He said Anglo Irish Bank came to Bank of Ireland with a plea for help and asked to be taken over or for the bank to buy part of Anglo.
Mr Burrows said he did not tell Anglo that Bank of Ireland had its own problems and said said he told the Central Bank governor John Hurley of his concerns at a pre-scheduled meeting that day.
He said he was "somewhat surprised" when Mr Hurley said he did not have any plans and the matter should be taken to the government.
He rang AIB chairman Dermot Gleeson who agreed they should approach the government and a meeting was set up for that night.
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He said they met then taoiseach Brian Cowen and minister for finance Brian Lenihan and others.
Mr Burrows said he told them of their concerns about the severity of the situation and the impact on banking.
Bank of Ireland and AIB were asked to come up with €10bn between them.
He said they did but when they were called back in, they were told by the taoiseach that the government had decided on a guarantee for all Irish banks.
Mr Burrows’ recollection agrees with his chief executive Brian Goggin but contrasts with AIB.
AIB had said it did not know there would be a blanket guarantee until the next morning.
He said there was no discussion on a four-bank guarantee and a discussion on nationalising Anglo was clearly ruled out by government.
Fine Gael's Eoghan Murphy raised details of a Department of Finance memo from the night which said Mr Burrows mentioned INBS and details of the guarantee.
Mr Burrows said that was not him.
He was also asked about a Bank of Ireland memo from a meeting held that afternoon which said CEO Brian Goggin said there would be a guarantee.
Mr Burrows said that did not happen.
He was also asked about another later Bank of Ireland memo, shortly after the guarantee, which said that market developments had triggered the guarantee earlier than expected and that the political judgment was that it had to apply to all banks and as a consequence, Anglo and Irish Nationwide Building Society were reprieved.
Mr Burrows said he could not recall this.
BoI was 'entirely solvent'
He said that on the night of the guarantee, Bank of Ireland was entirely solvent although it had great concerns about liquidity.
He said they had 60 days at least of visibility.
Fine Gael's Michael D’Arcy asked why AIB had a different recollection about the guarantee understanding it only applied to four banks.
Mr Burrows said they were all informed at the same time in the same meeting.
Mr Burrows said he had no idea whether Anglo Irish Bank and Irish Nationwide were solvent on the night of the bank guarantee.
When asked if the way that loan equity was measured had contributed to the crash, Mr Burrows said the reason for the property collapse was because the market had dried up.
He said funding was no longer available and transactions could not be done.
Mr Burrows said he concurred that NAMA was a good idea and was a comprehensive part of the solution.
Asked to clarify whether he had apologised for his part in the bank collapse, Mr Burrows said he had apologised very comprehensively to shareholders, those in Bank of Ireland and to the Irish taxpayer and wished to reiterate his appreciation for what the Government had done for the bank.
Mr Burrows said the bank did not feel it necessary to approach government to convene their assessment of the situation regarding INBS and why they had chosen not to rescue the bank.
He said their position had been made very clear to the Central Bank, which was the intermediary.
He said the €10bn from them and AIB to keep Anglo going would have given breathing space but a guarantee was necessary.
Mr Burrows was governor from 2005 to 2009, having joined the board in 2000.
Inquiry hears bank moved towards sales oriented approach
Another former governor of the Bank of Ireland has told the inquiry that there was no reason to believe reckless or imprudent lending was an issue during his time.
Laurence Crowley said his role as governor was as a non-executive chairman of the board, and he stepped down in 2005.
Mr Crowley said growth during his time did not rely on property lending and was instead based on acquisitions and capital management.
Inquiry chairman Ciarán Lynch asked Mr Crowley to clarify if he had earlier implied to the inquiry that Michael Snowden, an external CEO to the bank, had re-shaped the banking model at Bank of Ireland.
Mr Crowley said he did not think anybody in the 260 years of the bank has reshaped its model, saying it is what it is.
He agreed that the bank had moved towards a sales orientated approach between 2001 and 2005 but said this was not a change of in culture but one of emphasis.
Mr Crowley said he did not see a risk in such a strategy but did believe it needed to be kept under control.
AIB auditors had concerns over solvency in 2008
Auditors to AIB have told the inquiry that in 2008 it had significant concerns about the liquidity and the solvency of the bank.
KPMG sought and got assurances from the Financial Regulator, the Central Bank and the Department of Finance before it signed off on the accounts and on the bank as a going concern.
Paul Dobey, lead partner on the AIB audit at KPMG, said they wanted a full understanding of the risks to the financial system in Ireland and the actions being taken to address those risks.
Mr Dobey also said property-related exposures were appropriately disclosed in the accounts. He said accountancy rules did not contribute to the crisis but lessons could be learned.
He said AIB statements gave a true and fair view of the accounts. 20 partners and 200 staff worked on the statements which were complex.
Mr Dobey said the accountancy rules were not perfect and a major shortcoming was the delayed recognition of loan losses when the downturn came.
He said AIB was not permitted to make provision for future losses.
