Mr. Dermot Gleeson:

Thank you Chairman.

Mr. Chairman and members of the committee, I have furnished a written statement to the committee in accordance with its request to me. It may be of assistance to the committee if I say at the outset that so far as the macro story is concerned, without agreeing with every conclusion or every detail, in general I accept the broad thrust of the official reports prepared by Messrs Honohan, Regling and Watson and Nyberg, as well as the views ... most of the views anyway put forward by Dr. Donal Donovan and Professor Anton Murphy.

Irish banks, by and large, avoided the mistakes that wrought havoc in the balance sheets of American, continental European and British banks where credit derivatives and CDOs did the damage. Unfortunately, Irish banks made mistakes of their own, principally by excessive lending for residential and commercial development and these mistakes became exposed at the same time as international money markets shut up shop in September 2008.

AIB lent too much to individual developers, put too much faith in cross-collateralisation, too much faith in the large net worth of individual developers. We didn't do enough syndication or selling down of loans and, in addition, we relied excessively on risk models that proved inadequate to the cataclysmic events of '09 ... '08 and '09.

On 5 March last, the Minister for Finance and the current CEO of AIB, Mr. Duffy, made the very welcome announcement that AIB is on course to repay the total investment made by the State in the bank.

The great recession of 2008, the worst the world had seen for 80 years, didn't start in Ireland or in the Irish banks, but there's no doubt that there were decisions made in AIB which made things worse than they need have been for citizens, for employees and for shareholders. I wish to express my sincere regret for my part in those events, and to renew the apology which I made at the AIB AGM in 2009.

In analysing what went wrong at AIB, I should point out that I resigned from the board in June 2009 and my perspective is, therefore, largely limited to information that became available before my departure - I haven't worked there for the last six years - and may to that extent, be incomplete.

A country's banking system has been described as the nervous system of the economy, and in that sense the largest indigenous bank was never going to separate itself from the dominant economic activity of the society in which it functioned. In the years leading up to 2008, a principal engine of economic growth in Ireland was property and construction. It created a lot of jobs in connected trades and professions, paid lots of taxes, was encouraged by the State and the banks were fully involved in it. Quite apart from the tax incentives that I know the Committee has heard a lot about in relation to property, local-----