FitzPatrick built Anglo into a giant, and was lucky to leave when he did
To a large extent, Seán FitzPatrick was lucky he chose to step aside from the day-to-day running of Anglo Irish Bank when he did.
As chief executive from 1986, Mr FitzPatrick had shaped Anglo in his own image.
Anglo was run as the “lean and bureaucratic” lender that, without a huge network of branches, could beat the bigger banks.
He stepped down as the main boss, to become chairman, in 2005.
It was a role he held until the final collapse in the ill-fated nationalisation of Anglo in 2009 and the subsequent bailout of all banks.
The signage above the Anglo Irish head offices in St Stephen’s Green came down in 2011, but the legacy of Anglo and its banking chiefs will live on as the symbol of the Irish bank bailout and the eventual international bailout of Ireland by the troika.
Anglo, along with other banks, were responsible for putting extraordinary sums of money into the hands of a small roster of property developers and businessmen that helped pump up commercial property prices across the land.
When the property bubble burst, the scale of bank lending brought the country to its knees.
It’s easy to forget that Anglo was never more than a specialist lender. It never had a substantial number of offices.
By the time Mr FitzPatrick — Seánie to the close Dublin network of favoured clients — was at the height of his pomp, Anglo offices only included St Stephen’s Green in Dublin and branches in Cork, Belfast, and Limerick.
Outside of Ireland, it ran outposts for deposit-taking in the Isle of Man, Switzerland, and Vienna, and, in the US, had lending operations in Boston, New York, and Chicago.
By the time of its collapse, its US outposts, just like in the Irish cities, would be marked by personal bankruptcies.
Friends who were not major borrowers, and golfing buddies of Mr FitzPatrick and acquaintances of other Anglo bankers, rued the day they had stumbled across Seánie and the bank he helped to build.
Mr FitzPatrick was found not guilty in the two trials of charges related to Anglo.
At the first of the notable trials, in 2014, Mr FitzPatrick was acquitted of knowing, as chairman of Anglo, of the scheme by the bank to provide loans to 10 developers to buy Anglo shares to help unwind a huge shareholding built up by businessman Seán Quinn in the bank.
In 2017, after another marathon trial, Mr FitzPatrick was acquitted of misleading the bank’s auditors about personal loans worth tens of millions of euro following a ruling by the judge.
He had gone on trial accused of "artificially reducing" loans for a few weeks around the end of Anglo’s financial year to avoid their full value being shown in annual accounts.
Mr FitzPatrick had pleaded not guilty to all 27 charges, including providing misleading, false, or deceptive statements to auditors Ernst & Young and furnishing false information.
In that case, Judge John Aylmer ruled that the investigation carried out by the Office of the Director of Corporate Enforcement (ODCE) fell short of the impartial, unbiased inquiry to which an accused is entitled. Judge Aylmer said key witnesses had been coached.
Anglo cost taxpayers €30bn or about half of all the €64bn they were forced to pump into the banking system during the worst ever financial crisis for the State.
Mr FitzPatrick was fortunate to step down as chief executive when he did.
His departure to become chairman meant he was not involved in the mechanics and the criminal activities that ensnared his successor as Anglo chief, David Drumm, and other Anglo bankers.
In an interview with this reporter in 2003, Mr FitzPatrick revealed his plans to step down as chief executive of Anglo Irish Bank.
In his interview with the , Mr FitzPatrick spoke of his wish to pursue new business ventures after 17 years in the top job.
The Anglo Irish board had already started the executive search process to replace Mr FitzPatrick; the board would seek candidates from within the bank as well as outside to fill the top post.
That decision led to intense jockeying within Anglo to succeed Mr FitzPatrick.
Replaced by Mr Drumm, Mr FitzPatrick became chairman.
At the time Anglo had been among the best performing banks in Europe for several years.
Mr FitzPatrick told the : "I am 55 years of age now and I always felt that I would be leaving Anglo Irish Bank around 55 or 56.
"I won't be here in December 2005. I'll be gone well before that. It will be sometime in late December 2004 or early 2005."
He was, at the time, one of the longest-serving bosses of a stock market-listed company.
He was also the best paid, with a salary of €1.8m, which included a €1.2m performance bonus.
A year before the interview, he had received a 'golden handcuffs' bonus worth €952,000.
Part of the explanation was the extraordinary tight group of developer-borrowers Anglo had built as the Celtic Tiger was stirring.
Anglo was worth €2m when he took on the top job in 1986 and was valued at €3.6bn, the third most valuable bank after AIB and Bank and Bank of Ireland, in 2013.
"I am under no pressure from the board. I am under no pressure from myself other than I want to leave to do something else," he said in the interview.
"The board themselves are looking at the process of succession and not just for me,” he said, referring to other long-standing Anglo managers who were leaving at the same time.
"They are very, very adequate, and very, very strong replacements. And we didn't wait to the last minute until they were in place," he said.
Mr FitzPatrick said he was still enjoying the job, but had made it clear that he would not stay at the bank on turning 60.
At the time, Mr FitzPatrick said his current investments included a golf venture on the continent and other business interests in the West Indies.
By 2009 and his resignation from the nationalised bank, it emerged he had secretly borrowed many millions from the bank he led.
Mr FitzPatrick in 2003 spoke of the aim “to get the best person” to replace him as chief executive.
“Does that mean to get it inside the bank, reducing the population we can choose from, or do we go outside? If we go outside, does that person have the culture, which drives the bank? Does that person have it or not? There is no perfect answer for this. They are going to look at what is best for the bank."
The board would have to run the competition for a replacement in a way that is "transparent" and is not divisive by running the risk of creating winners and losers, he said at the time.
The hubris of Mr FitzPatrick, a mark of all the other bank chiefs that had loaned incredible sums to small groups of property developers and businessmen during the boom years, broke through in the interview.
"This is going to sound very arrogant but I don't mean it in that way. Who is going to replace Alex Ferguson? And I do believe there are better managers around than Alex Ferguson. The board has got to be brave," he said.
He was asked if he expected a bonus or 'golden goodbye' payment. Mr FitzPatrick said that the bank could decide that he was walking away from a well-paid job with a pension. "They could say he is going on his own volition."
Mr FitzPatrick said Anglo would stay focused on driving loan growth and was not actively considering an acquisition.
"I can't think of anything we would want to buy in Ireland," he said.
Significantly, Mr FitzPatrick rejected persistent claims made by industry rivals that Anglo had, by that time, expanded its lending because it is more prepared to take on riskier loans.
"But they are not higher risk loans," he insisted at the time.
"The proof of that is in the reading. It hasn't happened for the last two, five, or ten years. They have been going on for the past 25 years and we haven't found out yet. Then you have got Bank of Scotland, which is a fine organisation, and look at the loan book we have and the loan book they have."
He said in the interview that big bank rivals had failed to replicate Anglo’s success because they were hamstrung by the way they did business.
"They can't because of the cultural approach. Our people are no better or worse than the people who work in AIB or Bank of Ireland. They have distribution in every street corner; we don't. How do we get the business and do well? It is because of the people and the culture in the organisation."
By becoming chairman when he did, Mr FitzPatrick was to avoid direct knowledge of the desperate attempts others were to make in subsequent years inside Anglo to hide its financial plight.
The banking crash also exposed Ireland’s regulators for their failure to regulate properly all banks during the boom years from overlending to a concentrated group of property lenders.
Ireland’s banking crash was a matter of straightforward or “plain vanilla” overlending to a small number of people.
It did not involve complex derivative financial market products that played a huge role in complicating the bailout of lenders in the US when the global financial crash hit.
The lending in Ireland broke the starter class for regulators who are charged with stopping excessive lending to any single group, and to commercial property developers, in particular. Any pie chart showing Irish bank lending at the time revealed as much.
Politicians were also to blame.
And some leading businessmen emerged from the crash of Anglo in remarkably good financial shape.
It was also not a case of hindsight.
Many observers before the bubble burst actively discussed how much property prices would drop.
Lending to property developers spilled over to mortgage lenders but the €80bn in face value of the commercial property loans that were transferred from Anglo and the main general lenders into Nama show who was responsible.
Anglo was nationalised in January 2009, and was subsequently merged with another dead bank, Irish Nationwide, and renamed as the Irish Bank Resolution Corporation. The IBRC was liquidated in 2013.
Ireland had already sunk around €30bn into Anglo, accounting for about half of all the money Irish taxpayers were forced to inject into the banking system during the worst financial crisis for the State.
All the major banks at the time, including AIB, Bank of Ireland, and Irish Life & Permanent, needed to be bailed out to keep their doors open at huge costs to Irish taxpayers.
Anglo nonetheless will be forever linked to the crash because it was a bank that specialised in lending to property developers and played an outsized role in recklessly lending huge sums to small groups of property developers and businessmen.
First as chief executive from 1986, and then as chairman from 2005, Mr FitzPatrick built Anglo into the bank that was the main lender to commercial property developers.
It had only a small handful of branches in Ireland and overseas but had stated its ambitions even as it hurtled into disaster to grow and dwarf conventional general lenders like AIB and Bank of Ireland and to become the largest commercial real estate lender in Europe.
Anglo, around the world, became a byword for reckless lending during the boom. Some of the bank’s leading managers were found guilty of criminal activities in their attempts to hide its financial troubles as the crisis deepened, at the onset of the global financial crash in 2008.
The sums involved in Ireland recapitalising the banking system were so enormous that the international debt markets lost trust in Ireland’s ability to refinance its sovereign debts.
In late 2010, the government was forced to go to the troika of the EU, ECB, and IMF for a humiliating €67bn sovereign bailout.
The troika prescribed austerity which led to recession and unemployment eventually surged to over 18%.
Ireland was also told to repay the private bond debts of banks like Anglo. The mishandling of the crisis by the ECB and others in the early years almost led to the expulsion of Ireland and other bailed-out European nations from the single currency.
Soon after the crash, the authorities here almost immediately started investigating Anglo.
Ireland's bank-rescue costs were among the highest anywhere in the world. In all, Irish taxpayers were forced to inject €64bn, or about 40% of the country's annual economic output, to save its banking system from collapse.
The government formally exited its bailout and was again able to tap bond markets for funding, from late 2013.
Experts remained concerned about the length of time taken to investigate alleged wrongdoings at banks since the bust.
The collapse of Anglo also spawned many books.
Simon Kelly authored , a book of the boom and bankruptcy of one of the country's leading property developers families.
The title refers to his first major loans meeting with Anglo over breakfast in the Shelbourne Hotel, the favoured spot for Anglo bankers who were just a short distance down the road on St Stephen’s Green.
The book is really about the insight into how the whole horrible commercial property cycles of boom worked.
Fuelled by Government tax breaks, developers were effectively encouraged to tap billions in loans from lenders like Anglo.
“Banks have short memories — their need for profit has that effect — and they will always deal with you again,” Mr Kelly wrote.