A former executive with Anglo Irish Bank told his then chief executive, David Drumm, that billions of euros of deposits with another bank would go "round in a circle", a court has heard.

The alleged market deception trial also heard that the former Anglo executive described the €7.2 billion deal as “a big funny” to the then chairman of the now defunct bank, Sean FitzPatrick.

Four former executives from Anglo and Irish Life & Permanent (ILP) are on trial for allegedly conspiring to mislead investors by setting up a €7.2 billion circular transaction scheme to bolster Anglo's balance sheet. John Bowe (52) from Glasnevin, Dublin, Willie McAteer (65) of Greenrath, Tipperary Town, Co. Tipperary, Denis Casey (56), from Raheny, Dublin, Peter Fitzpatrick (63) of Convent Lane, Portmarnock, Dublin have all pleaded not guilty at Dublin Circuit Criminal Court to conspiring together and with others to mislead investors through financial transactions between March 1st and September 30th, 2008.

Detective Sergeant Michael McKenna from the Garda Bureau of Fraud Investigation continued to give evidence of the cautioned interviews given by Mr Bowe, Anglo’s former head of capital markets.

The jury heard recordings of telephone calls which gardai played to Mr Bowe during these interviews in June 2012.

In a call made on September 29th, 2008 and involving Mr Bowe, Mr Drumm and Mr McAteer, Anglo’s head of finance, Mr Drumm asked Mr Bowe: “The permo, that six billion fix. Are they still doing that?”.

‘The dance’

The accused replied that it had started and “we’re doing bits everyday”.

He explained to Mr Drumm: “So what happens is the money goes round in a circle...So I mean what’s happening is we give the money to them and the dance here is we actually get it back in time and that’s becoming very very tough to do.

“We have to pay it into the bank (ILP) and the bank have to give it to the insurance company (Irish Life) and the insurance company give it to us. It has to go through a lot of different hands”.

Asked by gardaí if this conversation was evidence of the circular nature of the transactions, Mr Bowe agreed but said each deposit was still a real deposit and came with the same risks as any deposit in a financial entity.

"ILP took a risk position and we took a risk position with ILP," he said.

He denied that Anglo was intending to deliberately misrepresent its end-of-year position. Asked if he honestly believed the €7.2 billion in deals represented a reality, he said: “It represented a reality. It was real and it was on the balance sheet”.

‘A big funny’

In another recorded telephone exchange from September 30th, 2008, Sean FitzPatrick, Anglo’s former chairman, asked Mr Bowe if there were “any funnies” in the year-end figure.

Mr Bowe replied: “We have a big funny with Permo (ILP).”

Asked about this conversation the accused told gardaí­ that it was slang used by Mr FitzPatrick and he didn’t correct it.

“Clearly it was an out of the ordinary trade. I believe it was an unfortunate use of words,” Mr Bowe said.

He said he wished to distinguish between the ILP prior-arrangement and other ordinary retail or market deposits.

Detectives put it to the accused that the phrase “hardly describes a legitimate transaction” and Mr Bowe told them: “I did not intend to imply that the transaction was not a real transaction”.

The trial continues before Judge Martin Nolan and a jury.