Maple Ten deal was ‘abnormal’, says expert

A banking expert has told the trial of three former Anglo Irish Bank executives the €450m worth of lending to the Maple Ten was abnormal in several respects.

Tom Reid, who was a director of Ulster Bank until 2004, told Dublin Circuit Criminal Court he would not have loaned the money to the 10 investors on the terms Anglo did in 2008.

He told the prosecution that one thing that struck him about the Maple Ten transaction was that the borrowers were being given personal loans of €45m each on the basis of only 25% personal recourse.

Mr Reid said that, in his experience, personal loans would normally be issued with 100% personal recourse to the borrower. He said 25% on such loans would “not be normal”.

The Maple Ten deal arose because of the need to unwind businessman Sean Quinn’s 29.4% control of the bank. Executives within the bank devised a plan to have six members of the Quinn family and 10 wealthy Anglo customers buy the shares using money loaned from the bank.

Former Anglo executives Sean FitzPatrick, William McAteer, and Pat Whelan, have pleaded not guilty to all charges against them.

Mr Reid yesterday told Paul O’Higgins, prosecuting, that there were several abnormalities in the bank’s lending to the Maple Ten.

He said it was unusual the bank approached the Maple Ten to invest in the deal.

Mr Reid also noted that memo to the Anglo credit committee for the Maple Ten loans stated that it was the bank that approached the customers.

He said he believed the memo to the committee was “a bit sparse” and contained no details of the net worth of the borrowers or their borrowing history. He said he personally would not feel comfortable approving the loans in such circumstances.

He said he would also expect that there would be minutes of the credit committee meeting that decided the loans, including any additional terms and conditions that were discussed.

The trial has previously heard that the loans were approved outside an official credit committee meeting.

Michael O’Higgins, defending Mr FitzPatrick, put it to the witness that he had left the world of banking before a very unusual period involving a massive economic boom followed by a downturn.

Mr Reid said the principles of lending remain the same at all times.

Mr O’Higgins suggested Mr Reid would have been a “lonely voice” during the economic boom, and that aggressive lending practices were common among all banks, including Ulster Bank. Mr Reid agreed.

Mr Reid also agreed that, “conceptually”, he does not have a problem with a bank lending money to clients on commercial terms for share purchases as long as they are on a 100% recourse basis.