(Photo: Reuters)
(Photo: Reuters)

Anglo Irish Bank bosses deliberately misled the government and regulators about the financial health of the group, according to secret phone calls between two executives, prior to the huge bailout that brought Ireland's economy to its knees.

According to one of the phone calls heard by the IBTimes UK via Ireland's Independent newspaper, when AIB's head of capital markets John Bowe was asked on how he arrived at a figure of €7bn (£5.9bn, $9.2bn) for central bank aid, he replied "Just, as Drummer [David Drumm, former CEO] would say, 'picked it out of my a***.''

In 2008, Ireland's government offered a blanket guarantee to its banks, experiencing the 'credit crunch,' that had fuelled a massive property bubble with aggressive lending practises.

In 2010, Dublin had to accept a €67.5bn bailout from the European Union and International Monetary Fund, as the cost of rescuing the country's banks reached a €64bn overall. To pay for the massive bill, Ireland's population had to endure painful austerity measures.

During a number of phone call recordings, which were peppered with laughter, Bowe told AIB's director of retail banking Peter Fitzgerald that "the strategy here is you pull them in, you get them to write a big cheque and they have to keep - they have to support their money."

Suggesting that asking for too big of a bailout fund may spook the market, Bowe added "if they saw the enormity of it upfront . . . they might decide they have a choice. They might say the cost to the taxpayer is too high."

". . . If it doesn't look too big at the outset . . . if it looks big, big enough to be important, but not too big that it kind of spoils everything, then, then I think you have a chance. So I think it can creep up."

Since the onset of the financial crisis, three Anglo Irish executives have been charged with financial irregularities, although a trial is not expected to take place until 2014.

In one phone call, Bowe said he did not see a future for AIB, telling his colleague that he felt it could be "broken up and sold or nationalised".

AIB cost the taxpayer €30bn and was eventually nationalised in 2009. It has since been renamed the Irish Banking Resolution Corporation and the group is still being wound down.

Bowe told the media that he categorically denies allegations that he wilfully deceived regulators about AIB's financial health.