Results 16,581-16,600 of 27,945 for speaker:Michael McGrath

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Okay. Can I just ask that page 5 of the core booklets would again be put up? And, so this is Project Atlas No. 2. And just so that we're all understanding these figures correctly, the box on the top left, looking at the impairment basis points. So, for residential mortgages scenario 1, 15 there is actually 0.15%.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: So, similarly, development land without planning permission is 10% in scenario 1 and 15% in scenario 2.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Yes. Just so we're getting our zeros correct. And this was the assumption for scenario 1 and scenario 2 for one year.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: And it was clear in the report that the overall assessment was based on a repeat of that for three successive years.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: That was clear in the documentation because it's not clear in the extracts we have here.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Yes, okay. So the projection for development land without planning permission was, under scenario 1, that it would fall by 10% in 2009 and 15% in 2009 under scenario 2. Is that correct?

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Okay and that that would repeat for three years, so a total fall, in development land without planning of 30% or 45%. And on the area that Deputy O'Donnell zoned in on - commercial/corporate, so scenario 1, a 1.5% drop in commercial property values in 2009, and scenario 2, a 1.25% drop in 2009.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Okay. Yes, these are impairments of the loan balance.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: So, bringing you to either 4.5% or 3.75% of full provisions. So, I think in your discussion there, you are accepting that overall, given what happened subsequently, those impairment levels - which were not intended to be a forecast, and that is clear in your document - ended up hopelessly underestimating the true extent of the impairment in that area.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Okay.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: When did the tier 1 capital requirement go from 4% to 10%?

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Because you've referred to it a number of times.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: 2010, so it wasn't in any way relevant at the time when-----

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: -----when these reports were being compiled? And when did PwC conclude that additional capital would have to be put into Anglo Irish Bank?

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Okay, but even under the most adverse assumptions that you made, your analysis was projecting at that time that Anglo would not need any additional capital in order to meet the minimum capital requirements.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Through 2009 and 2010.

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Well then, just go to that excerpt on page 37, which isn't on the system, of the summary document which has been published - that under PwC highest stress scenario, and it was core equity and tier 1 ratios are projected to exceed regulatory minima 4% at 30th of September 2010, after taking account of operating profits and stressed impairments. So, under the highest stress scenario, you were...

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: And you make it clear that you were sticking with the four of the five assumptions that management had made in their assessments, they're in the previous page of that document. And assumption one is, Anglo will continue to generate core operating profits in line with existing profit levels, despite the current downturn. So your projections were based on that assumption, that Anglo would...

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: Thanks, Chair. Finally, one of the reasons that you cited earlier for the true picture ending much worse was around the issue of loan security, security not being properly tied down, cross collateralisation, personal guarantees not being worth a whole lot when the bank tried to pursue them. But when did you first identify any concerns in that area, because even going back to the letter of...

Committee of Inquiry into the Banking Crisis: Nexus Phase (9 Sep 2015)

Michael McGrath: -----and review the loan files, and discuss the contents of these files and supporting documentation with members of management. So your engagement did require you to look at the underlying documentation in respect of the loans extended to the major borrowers. So did you identify any concerns about the underlying security, cross collateralisation and securities not being legally tied down?