Mr. Eugene Sheehy:

Our proposal was for a four-bank guarantee. Clearly when you are discussing nationalisation, liquidation or default of an institution, that's not part ... that institution isn't part of the future, that's part of the past that has to be dealt with. We argued, I certainly argued, that the bonds should be included and the reason for that was if you looked at the mistakes that were made in the US around Lehman's and the inconsistency from day to day of the regulatory response, not only in the US but in Europe and in the UK - where we knew ... we found out subsequently there was secret loans being given to banks - you had to be clear about the message you were giving to the market. Clarity is very important. If some of those instruments weren't covered, our investor relations desk would have 100 calls within one minute about "Define exactly what you mean here". So the definition and the clarity were important.

It is worth pointing out that on the night, AIB had no bonds or subordinated debt instruments that would in any way have been enhanced by the guarantee. None. We had perpetual debt, which is irrelevant for a timed guarantee and we had dated debt, the earliest of which fell due in 2013. So there was no agenda from our point of view of getting something extra.

The pricing of the guarantee on the evening wasn't discussed. Now, we did have a reference, if you looked at the €100,000 guarantee for individuals which was introduced on 20 September, and that had a 20 basis point price on it. In the bilateral discussions that we had around pricing of the guarantee I was pushing for an FDIC model which is the US model about ... you price the guarantee relative to the risk you are taking, and the risk you are taking is based on a formula, called a CAMEL formula, which takes in capital, liquidity, management risk. It would take a bit of working to do but there was a model for pricing of guarantees that's the biggest model in the world, used by the FDIC in the US.