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SILLY BANKERS; Irish finance firm loses its German backers EUR17bn.


AN Irish-based financial firm with debts of more than EUR17BILLION almost ruined a German state bank, it was revealed yesterday.

Saxony's Sachsen LB was unable to meet the vast debts of Ormond Quay, from Dublin, forcing other German monetary bodies to step in with a rescue package at the weekend.

It has now been disclosed the investment company owes EUR17.3billion and Finance Minister Brian Cowen has been called on to explain how Ormond Quay was allowed to operate outside the control of the Financial Regulator.

Labour's finance spokeswoman Joan Burton said: "Ultimate responsibility for this situation must rest with the Minister for Finance.

"The authorities have looked the other way as a growing sector in Irishbased international banking was allowed to remain unregulated.

"Minister Cowen now needs to explain what steps, if any, he intends to take to ensure they are subject to scrutiny."

Ormond Quay funded long-term investments with short-term borrowings.

It ran into difficulties when it was unable to raise fresh short-term loans due to the turmoil in the global markets.

Parent company Sachsen LB could not provide the necessary funds, prompting the German Savings Banks Association to provide an emergency loan with the }support of the government of Saxony.

The rescue package also covered two other Dublin-based funds managed by Sachsen's Irish subsidiary.


QUESTIONS: Joan Burton; EXPLANATION: Brian Cowen
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Publication:The Mirror (London, England)
Date:Aug 22, 2007
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