Former minister for finance Brian Lenihan wanted to wind down Anglo Irish Bank and Irish Nationwide on the night of the bank guarantee, the Oireachtas banking inquiry has heard.

Former Allied Irish Banks (AIB) chairman Dermot Gleeson said the former minister told him he was prepared to let the two banks close.

Mr Gleeson refused to be drawn on whether Mr Lenihan was overruled.

Fianna Fáil Senator Marc Mac Sharry asked if the former minister had shared anything else with him about the decision.

Mr Gleeson said he didn’t and was acutely aware of the fact Mr Lenihan couldn’t give his version of events.

Mr Gleeson said on September 28th, Eugene Sheehy told him he had been told by the authorities two institutions were going to fail.

He said: “We knew it was Anglo and Nationwide. I didn’t give much reflection to how they would be dealt with. I thought they were going to be nationalised.”

The AIB former chairman said on September 29th Sean Fitzpatrick phoned him and asked him to come to a meeting with him in the Central Bank. That meeting did not happen.

The chairman said: "There was a lot of nervousness. People were fraught. Richard Burrows (former Bank of Ireland chairman) said I think we should go see government. I said I agree'."

Mr Gleeson said he was surprised that members from the National Treasury Management Agency (NTMA) were in the building but were not consulted.

He added: “Nothing surprises me anymore.”

Not aware

Earlier the inquiry heard that AIB representatives were not aware that the government was going to introduce a blanket bank guarantee.

Speaking at a hearing on Thursday, Mr Gleeson said that when he left a meeting at Government Buildings in September 2008, he was not aware of the decision.

Describing the events of the night of September 29th 2008, the chairman said the conversation was focused solely on the international collapse and the state of Anglo Irish Bank.

Mr Gleeson said the events of that night have been misrepresented and the purpose of the crucial meeting was to discuss the collapse of Anglo Irish Bank and the effect it could have on AIB.

He said: “I make no complaint about that. It is a fact, AIB were not present when the decision was made.”

The former chairman said he learned of the guarantee learnt from the media early the next morning.

Mr Gleeson said there was a piece of paper on the night of the guarantee written by him or former chief executive Eugene Sheehy with a few words on it.

He said it had less than 20 words including “deposits”, “bond” and related only to the scope of the guarantee.

Members questioned him on his written submission which said the AIB’s document contained a more extensive formula than that of Bank of Ireland.

Mr Gleeson said he doesn’t remember what exact “formula” he wrote on the paper.

He said it was handed over at the meeting and it didn’t come back to him.

Mr Gleeson declined to say whether the guarantee was the right decision saying he doesn’t have sufficient experience to say either way.

He denied Allied Irish Bank showed any preferential treatment to senior bankers.

Solvency

The inquiry heard of a letter sent from Mr Gleeson to SeanFitzpatrick, chairman of Anglo Irish Bank in October 2008.

He took issue with a radio interview the then banker had done on the Marian Finucane Show when he claimed all banks were insolvent.

The committee heard Mr Gleeson wrote to Mr Fitzpatrick saying the comments were “frankly outrageous”.

Asked by Fine Gael TD John Paul Phelan about the letter, the chairman said the claims were untrue.

He said: “We didn’t believe we had a solvency problem on the night. Nobody asked us.”

Mr Phelan asked the chairman what responsibility he carries for the crash at the bank.

Mr Gleeson said he was the chairman and the “buck stops with me”.

He said: “I did my level best but it wasn’t enough. I can never get away from that.”

Mr Glesson also said it was the view of AIB bankers that Irish Nationwide was “irretrievably broken” in September 2008.

He said that was their opinion in the lead up to the guarantee but did not have the same insight into Anglo Irish Bank.

Mr Gleeson also said it was never contemplated by AIB that it would take over Anglo Irish Bank.

He said: “It was never considered. It was never contemplated every second.”

‘Regret’

Mr Gleeson said there is a tendency to believe that banks brought the country down by themselves.

He said: “I am responsible for my role in the banking crash. I am not taking away from that but I think it is important to say they were other factors at bay.”

He said even though the bank is set to repay the €20 billion that was given to the banks, the sense of “regret will never leave” him.

Mr Gleeson earlier said that AIB lent too much to individual developers prior to the banking crisis.

He said the institution relied heavily on risk models that proved to be inadequate.

Mr Gleeson said the bank was divided into five divisions and spread across a number of countries.

He said Ireland became embroiled in property lending that was too expansive and was not controlled by the risk models.

He said: “We went too far with individual developers.”

The chairman said most of them had been customers of the banks for decades who had always paid bank their loans and the bank “too much comfort” in that history.

Mr Gleeson said he sincerely regretted whatever role he played in the bank’s collapse and repeated his apology he made at an annual general meeting in 2009.

He also said the great majority of institutions including the board of AIB held the consensus that there would be a soft landing.

Mr Gleeson said: “The consensus was wrong.”

He finished his evidence at 1pm and committee will hear from former managing director Donal Forde at 2.30pm.