I thank the Chairman and members of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach for inviting AIB to meet them today. My team, which includes Ms Helen Dooley, our group legal counsel, and I, look forward to answering, where possible, members' questions concerning leaks recently published in the Paradise Papers.
To begin, I will endeavour to provide an insight into the management and operation of AIB’s businesses in the Isle of Man and Jersey, both of which have been closed for several years now. AIB first established an offshore presence in the Isle of Man and Jersey in 1977 and 1981, respectively. The rationale for establishing this offshore presence was to support the bank’s growing business franchise in Britain and the United States and to meet the banking needs of the increasing international workforce.
In line with all financial institutions, the variety of the products offered developed over the years and included deposit, lending and trust services. AIB provided banking services to residents of the islands and to expatriate individuals who were working and residing in another jurisdiction, be that in the United Kingdom, the United States of America or, more latterly, in the United Arab Emirates, UAE.
Services did not include providing tax advice. Clients of the offshore businesses were required to take independent tax and legal advice. The offshore businesses worked with those advisers in full compliance with local and international regulation, to provide a range of products, for example, trust structures, that were used for a variety of reasons from estate planning to managing individual and corporate investments, to more basic banking services. AIB ceased this trust business in the Isle of Man 14 years ago and sold the Jersey trust business in 2011.
In the chaos that prevailed during the financial crisis, AIB, like every other Irish bank, was focused on the imperative of protecting its deposit base. The offshore business was no different in trying to maintain its deposit base. In any event, AIB’s offshore deposits declined rapidly during the bailout era, from a peak of almost sterling £2.5 billion in 2008 to sterling £191 million in 2012.
In 2012, the banking businesses in both Jersey and the Isle of Man, which at this time included Anglo Irish Bank’s business in the Isle of Man - these had been transferred to AIB on the direction of the then Minister for Finance in February 2011 - were identified as non-core to the bank. In April 2012, AIB announced that the remaining Isle of Man and Jersey businesses would be wound down. The orderly wind down of the businesses commenced in May 2012 under the supervision of the local regulators and was completed in December 2013.
Today, AIB’s sole interest in Jersey and the Isle of Man is in respect of its customer liabilities associated with the legacy book, which is administered in both jurisdictions by Estera, a managed services business previously owned by Appleby solicitors. Currently, circa sterling £13.5 million is being held in respect of AIB Channel Islands, CI, Limited and AIB ISL Limited as liabilities owed to customers.
The companies have surrendered their banking licences and have stopped doing any new business and no longer trade. The legal entities are required, under regulatory requirements, to remain in existence for up to ten years from the date of closure to honour the liabilities of customers. Thus, our interest, involvement and participation in the offshore business is and has been over for many years.
I thank the committee for allowing me the opportunity to make this introductory statement. My team and I will, of course, answer the committee’s questions to the best of our ability.