Mr. Matt Moran:

Thank you, Chairman. Chairman, members of the committee, since the beginning of 2009 I have co-operated with all the various lines of inquiry and investigations by State and other bodies and I welcome the opportunity to come before you this afternoon. In addition to the detailed written submission which I furnished to the committee in early August 2015, I come here today before you to further assist the committee - as best I can - in the crucial work you are undertaking.

The failure of Anglo Irish Bank and the wider banking system in Ireland was a calamity for the Irish economy and for the many people associated with the banks, including staff, customers, investors and the Irish taxpayers. Whilst I never served as a member of the board of directors of the bank or as an executive director, I was within the next layers of management, both before its nationalisation and afterwards. Following nationalisation by the Minister for Finance in January 2009, the new Government-appointed board selected and appointed me as director of group finance. I will endeavour to give the committee as clear a picture as I can of the circumstances of which I have knowledge surrounding the failure of the bank.

I joined the bank in late 2002. Prior to that, on completion of my university studies, I spent some eight years as a financial consultant in London and New York, primarily in supporting small and medium-sized enterprises. I had no lending experience and my role in Anglo was not on the lending side. My brief was to support the group finance director, as required, and I carried out a variety of projects in this regard. My expertise was in corporate finance activities such as mergers and acquisitions, equity raising, financial analysis, as well as special financial assignments. Among the projects that I managed or had significant involvement in were: major share placings, raising almost €1 billion in new equity capital for the bank; liaison with international investment analysts that were conducting independent analysis on the business; assessing acquisition opportunities; and completing the disposal of the bank’s private banking business in Austria and also in Switzerland.

Within group finance, I was involved in restructuring management accounts reporting ... to enhance reporting standards, recruiting specialist accounting skills in each area of the Dublin-based finance team, overseeing the introduction of international financial reporting standards for the bank's accounts and in assisting the leadership of the treasury trading business to devise strategy and business plans.

In late 2004, I was given the title, chief financial officer, to assist my profile in representing the bank without any change of my role. My investor relations function meant externally I became more widely known as an executive of the bank. My work in these and other areas reflected well on the bank internationally and increased my standing internally. I also had responsibility for managing the group finance Dublin function. This function included the preparation of monthly management accounts, the preparation of regulatory returns on the direction of the group finance director, and liaising with the auditors on the conduct of the audit of the Irish operation of the bank and group consolidation. During this period, the quality of the bank's internal and regulatory reporting were greatly improved.

Events since the banking crisis have shown that the risk position of the bank and that of all other financial institutions in Ireland deteriorated to an event ... to an extent not foreseen at that time. The same happened across Europe and elsewhere. There are well-documented external and internal reasons for this. The external reasons have already been aired before the committee. I don't propose to dwell on these, except to underline that they made life impossible for many financial and regulatory institutions, with fault lines being exposed across a wide spectrum. There was little or no perception by forecasters or authorities of the severity of what lay ahead. In addition, the bank had a distinctive external pressure arising through the Quinn investment and leveraged contracts for difference that were held through a multitude of investment banking and other broker counterparties internationally.

There were also significant internal issues within the bank, some of which are indicated in the core documents circulated by the committee in recent weeks. These support the view outlined in my written submission to the committee that the lending function was excessively dominant in the bank and that the risk function controls were, ultimately, insufficient. This is best captured in the decision to consolidate the leadership of the risk and finance functions under the group finance director in 2007 and the management reorganisation of the same year. That reorganisation saw the senior executive board narrowed to just five people, including four lenders and one non-lender. It was apparent from these and other events that the value attached to independent views had diminished.

Group finance Dublin did not have responsibility for lending by the bank. Group finance Dublin did not have any responsibility in group risk management, which was the key control function in the conduct of the bank's lending business. At all times since the late 1990s, risk and finance teams were entirely segregated with distinct areas of responsibility. This continued to be the case even after the aforementioned change to leadership.

Management accounting and audit relied on the integrity of the data inputted by the lending divisions, regional operations and other departments in the bank. This data was adjusted to account for impairments and provisions set out in a monthly report prepared independently by the risk management department based on its detailed assessment of loan risk. As in almost all banking institutions, the interrogation and scrutiny of lending data and underlying risk was the responsibility of risk management. Inadequate controls in this area was one of the factors in the subsequent difficulties that faced the bank.

From the second half of 2007, throughout the year 2008 and into 2009 the bank was in constant spasms of crisis. Strenuous efforts were made to determine the extent of the bank's downside exposure to the ensuing financial turmoil, both within and outside of the bank. My role throughout this time was primarily looking at capital opportunities for the bank in international capital markets. The incessant downward spiral in each of the economies in which the bank lent money, but most particularly in Ireland, exacerbated the scale of losses in each half year. None of these reviews by multiple parties from within and outside of the bank identified the scale of the potential losses. In addition, none of them, from what is known to me, found defects in financial reporting in respect of lending impairment.

Internal audit within the bank, which reported directly to the board audit committee and the chief executive, would have conducted its own reviews on processes and procedures. The factors contributing to the failure of the bank were multifaceted and complex. There were many actions, decisions, events and circumstances surrounding this and all viewed through a different lens than the one we use today.

I would like to conclude by expressing my own sincere and deep regret for the great hardship that the failure of the bank and the wider banking system in general inflicted on so many. Chairman, notwithstanding the constraints placed upon me, which the committee is aware, and the fact that I have not had access to potentially relevant materials pertaining to the bank from 2002 through to 2008 and thereafter, I will now endeavour to answer any questions you and other members of the committee have and seek to help you in relation to your lines of inquiry.