Central Bank says it was satisfied with disclosure levels at Anglo

The Central Bank has signalled its satisfaction with disclosure levels at Anglo Irish Bank when it pitched a €30bn bond offer while simultaneously trying to secretly "dribble" Seán Quinn’s stake on to the market.

On May 23, 2008, then financial regulator Patrick Neary approved a €30bn bond prospectus for Anglo to present to the stock market.

This included a detailed discussion on risks facing the bank and the parties that controlled its shares. It said no individual shareholder had a controlling stake either directly or indirectly in its group.

The 88-page document, which was published on May 23, 2008, under the European Prospectus Directive, did not discuss the extraordinary arrangements that were simultaneously under way at the time.

The recent trial of three former Anglo executives revealed that, before the publication of the prospectus:

- The bank had informed Mr Neary that Mr Quinn controlled 28% of the shares inAnglo through contracts for difference (CfD);

- Throughout May 2008, Anglo was attempting to “dribble” 800,000 CfDs on to the market every day in a bid to protect its share price;

- Regulators in Ireland and London had discussed the manner in which the markets were moving against Anglo;

- Mr Quinn was having to borrow heavily to fund his margin calls on the CfDs;

- The Quinn Group had communicated with the regulator’s office to disclose the extent of the CfD stake.

None of this information was alluded to in the May 2008 prospectus or cited in the six pages of risk factors.

Anglo was not obliged to disclose CfD positions. However, the regulator could have required it to publish information it deemed was necessary for investors to make an informed decision.

Two months earlier, the regulator had received the results of a consultation process with the listed companies on the Irish Stock Exchange which strongly argued for greater disclosure of CfD holdings.

The Central Bank would not reveal what was the response to this document.

The regulator’s office was heavily criticised at the end of the Anglo trial by the presiding judge, Judge Martin Nolan, for the covert support it gave to the illegal activity in the bank.

The Central Bank said it would not comment on the specific prospectus.

However, it said: “The Central Bank will approve a prospectus when it is satisfied that the Issuer has complied with the disclosure requirements prescribed by the Prospectus (Directive 2003/71/EC) Regulations 2005, as amended.”