Mr. David Gantly:

-----I'd like to say that I've endeavoured in my written responses to address the lines of inquiry as fully as I could but in some instances that I actually had ... did have to limit my, my responses. So I worked in Irish Life and Permanent as treasurer from 2000 to early '09, effectively the period covered, obviously, by this inquiry. And in that role I was responsible for all activities relating to treasury, counterparty credit exposures, market risk, funding and liquidity management. The treasury function itself was physically located in the IFSC and my direct reporting line was to the group finance director. I was a member of the senior management of the group at that time. I was not a member of the board nor was I a member of the bank executive. With regard to board-appointed committees, I was a member of the assets and liability committee; I was a member there since 1994. I was also a member of the group risk committee, which was set up in 2007, and the group CEO had set up a new strategy team in early to mid-'07 and I was not a member of that group.

So given my role and the lines of inquiry that I've been asked to address, I'd just like to make a few brief comments regarding liquidity in the banking system and to make some specific comments in relation to Irish Life and Permanent's liquidity and, indeed, funding strategies. So a fundamental function of the banking system is the provision of maturity transformation whereby banks fund longer-term assets with shorter-term liabilities. This provides longer-term liabilities to households and corporates, which facilitates long-term capital investment with obvious economic benefit and social benefit, indeed. The provision of maturity transformation creates liquidity risk for banks. So the regulatory liquidity standards that banks are required to adhere to seeks to mitigate that risk and, in addition, Irish Life and Permanent's funding strategy sought to further mitigate that particular liquidity risk. So Irish Life and Permanent's funding was broadly split into three thirds: long-term debt, customer accounts and short-term wholesale debt. We also held and managed a liquidity portfolio, which provided a substantial buffer against any adverse movement in our short-term wholesale liabilities. Irish Life and Permanent's balance sheet differed from the two main banks in that 85% of the assets comprised residential mortgages, which were highly liquid in normal market conditions. Irish Life and Permanent was also a bank assurer which was created post the merger of Irish Life, the country's largest life assurer, and Irish Permanent in 1999. The bank's credit rating and its ability to raise debt in capital markets benefitted from that particular group structure. Despite extremely difficult market conditions in 2008, Irish Life and Permanent raised over €3 billion of long-term debt through bilateral transactions. Residential mortgages on top of that could also be used as collateral for drawings with the ECB.

So by 2008, Irish Life and Permanent had a loan-to-deposit ratio of 275%, which was significantly higher than that of the other Irish banks. Irish Life and Permanent had, as I said, the backstop of being able to access ECB funding by using its less risky residential mortgages as collateral, a point which is acknowledged in the Nyberg report.

I would also say that, you know, a low loan-to-deposit ratio is not a panacea in itself. The Turner report, which was commissioned by the Chancellor of the Exchequer in the UK in October '08 and was published in March '09 ... and in that Lord Turner, the then chairperson of the FSA in the UK, was asked to review the causes of the crisis and to make recommendations on changes in regulation and supervisory approach to help create a more robust banking system. The report provides a very clear and in-depth analysis of the root causes of the crisis and provides a very clear template for suggested changes to make to the banking system to make it more robust. So, with regard to funding that particular report highlights the fact that Icelandic and Irish banks were active deposit takers in the UK market and these deposits, while they did reduce their loan-to-deposits ratios, as the crisis dragged on and deepened these deposits did not remain sticky and were ultimately not renewed, so-called "sticky deposits" obviously being less likely to be withdrawn in a crisis event.

So Mervyn King, the then Governor of the Bank of England, made the point that the crisis revealed faultlines in global regulation and supervision, pointing out that global banking institutions are global in life but national in death, a point that we clearly saw. So, Irish Life and Permanent's funding strategy was formulated with the intention of providing a sustainable, stable funding platform and this strategy was formulated against the conventional wisdom that a liquidity event would be very short-lived. The banking system is susceptible to liquidity events. I had first-hand experience of significant liquidity disruption in markets during the Russian debt crisis and the collapse of Long-Term Capital Management in 1998. Global markets also experienced a severe liquidity shock post the 11 September attacks and, in both those instances ,regulatory authorities acted very decisively to find a quick solution to the problems and that was actually achieved. So the recent crisis, which was clearly systemic, its impact unprecedented, the duration of the disruption in markets was not anticipated and, inevitably I think, the regulatory liquidity requirements which were in place were not sufficient to withstand that particular shock. So regulators, clearly, are revising capital and liquidity standards in order to strengthen the system and prevent a recurrence of recent events which, regretfully, have had such a devastating impact on Irish citizens.

Thank you, Mr. Chairman, and I am happy to take any questions.