Draft Central Bank documents prepared before AIB and Bank of Ireland joined the “guarantee night” talks pointed to a shorter, narrower scheme than provided by the eventual guarantee, the inquiry found.

Noting that top figures from AIB and BoI had arranged to meet then taoiseach Brian Cowen in Government Buildings at 9.30pm that night, the inquiry said there were conflicting views as to whether the banks provided their own written guarantee proposals.

“A draft press release announcing a six-month bank guarantee had been prepared by the Central Bank prior to 21:10 on the night of the guarantee. The draft release only covered deposits and interbank lending,” the inquiry found.

The guarantee as agreed was much broader in its scope – covering both subordinated and senior bonds – and was for a two-year duration.

Extension

The inquiry cited Mr Cowen as it set out its efforts to establish why the decision was made to extend the guarantee for two years. “It was an issue, I think, that would have been discussed when the banks were there and it was an issue that was decided upon ultimately by just ourselves – the State actors,” Mr Cowen said.

The committee said Kevin Cardiff, then a senior official in the Department of Finance, recollected how the banks had sought a longer guarantee.

In his statement, Mr Cardiff said he was asked to produce drafts of the final announcement “based on” the banks’ wording. “I believed that this wording was broader in a number of respects than had been understood by the official parties, and I told the Taoiseach, in a side conversation, that if we accepted their wording, ‘the banks would be laughing at us’, or words to that effect,” he said.

“The Taoiseach immediately asked me to ensure the draft reflected the understanding of the official parties as to the decision taken, rather than the banks’ draft.”

Solvent

The inquiry said the first draft of the eventual statement said all the banks were solvent but that bank representatives moved to change this. “The word ‘solvent’ as it pertained to the status of the covered banks was removed from the final official Government statement, announcing the guarantee,” it said.

“Much has been written and said about how the terms and scope of the guarantee were arrived at. Again the absence of any documentation or formal minutes means that the detail of evidence offered on the terms and scope relies largely on memory.”