The Plan by John Francis Kinsella
Desmond Casey joined the exclusive club of Ireland’s nouveau very riche in 2008, along with those of the like of Brendan Allen and Derek Quinlan, who had become national heroes. The dream was short lived, barely a year later Casey found himself opting for voluntary bankruptcy with debts amounting to four billion euros. The vast fortune amassed by the London-Irish businessmen during the economic boom had simply evaporated.
In 1970, Casey had set out to make his fortune in London. Well-spoken and a smartly dressed, the young man was hired as a runner by a City brokerage firm. After a couple of years he graduated to junior broker working the phone to sell investments.
A decade later, Casey returned to Ireland, sensing conditions were ripe to launch his own business. The years spent in London had provided him with sufficient money to put a deposit on a couple run down houses in an up-and-coming Dublin suburb. After a quick he renovation job he sold them at more than twice the initial price and repaid the loan taken out with the National Dublin Bank. Then, by repeating the experience, he quickly built up a capital and invested it in the construction of small housing estate on the outskirts of the city.
Fifteen years later Casey found himself at the head of an international empire with property assets in Ireland, the UK, Spain, Croatia and Morocco, employing more than five thousand people in London and Dublin. At the height of the Irish property boom, he was one of Ireland’s richest sons.
During the early years of his meteoric rise, Casey realized Ireland was headed for a long period of prosperity and economic expansion. On the recommendation of National Dublin’s then managing director, he bought shares in the bank on the basis of CDFs, or contract for difference.
His experience in the City had taught him a few of the finer points of investing. The contract for difference market offered Casey a certain number of advantages: there was no set future price and no set future date. A buyer simply agreed to pay or receive the difference between the starting price and the price at the point of liquidation of the contract. In addition there was the advantage of leverage, with ratio of up to 20:1, he could boost his potential profit ― just as it could increase the losses.
At that time banking share prices went in only one direction ― up. So as the value of the shares in the National Dublin Bank rose, so did the borrowing power of his property development business; his assets providing the necessary guarantee. The problem was Casey came to believe that prices could only go up and progressively he increased his wager.
As Casey’s property development business grew over the course of the boom years, he continued to use it as a guarantee to cover his position, gradually increasing his shareholding in the National Dublin Bank to thirty percent of the bank’s total share capital. That was fine as long as prices went up, but with the collapse of property values and the subsequent collapse of Irish banking shares Casey was hit by a double whammy. Under the burden of failed property loans, the National Dublin Bank collapsed, as did other leading Irish banks. From a peak of twelve euros, the value of the shares Casey held fell to a mere twenty cents, a calamity that led to the nationalization of the bank.
Casey had squandered the fortune he had built up in a senseless gamble on the notoriously reckless National Dublin Bank. Casey, like the banks, had become addicted to leverage at a time when Ireland had become intoxicated by it. His disastrous investment in National Dublin Bank cost Casey Holdings more than one billion euros.
But Casey still had a trick or two up his sleeve. He decamped to London where bankruptcy laws were less onerous than those in the Republic. There he applied for voluntary bankruptcy in London’s High Court. In Ireland he would have been banned from running a business for up to twelve years, whereas in the UK, Casey would be debt-free in a year, in spite of the billions he owed. That did not however prevent the Court from seizing his properties and just about everything else he possessed to cover his debts.
Chapter 45 LONDON
In 1970, Casey had set out to make his fortune in London. Well-spoken and a smartly dressed, the young man was hired as a runner by a City brokerage firm. After a couple of years he graduated to junior broker working the phone to sell investments.
A decade later, Casey returned to Ireland, sensing conditions were ripe to launch his own business. The years spent in London had provided him with sufficient money to put a deposit on a couple run down houses in an up-and-coming Dublin suburb. After a quick he renovation job he sold them at more than twice the initial price and repaid the loan taken out with the National Dublin Bank. Then, by repeating the experience, he quickly built up a capital and invested it in the construction of small housing estate on the outskirts of the city.
Fifteen years later Casey found himself at the head of an international empire with property assets in Ireland, the UK, Spain, Croatia and Morocco, employing more than five thousand people in London and Dublin. At the height of the Irish property boom, he was one of Ireland’s richest sons.
During the early years of his meteoric rise, Casey realized Ireland was headed for a long period of prosperity and economic expansion. On the recommendation of National Dublin’s then managing director, he bought shares in the bank on the basis of CDFs, or contract for difference.
His experience in the City had taught him a few of the finer points of investing. The contract for difference market offered Casey a certain number of advantages: there was no set future price and no set future date. A buyer simply agreed to pay or receive the difference between the starting price and the price at the point of liquidation of the contract. In addition there was the advantage of leverage, with ratio of up to 20:1, he could boost his potential profit ― just as it could increase the losses.
At that time banking share prices went in only one direction ― up. So as the value of the shares in the National Dublin Bank rose, so did the borrowing power of his property development business; his assets providing the necessary guarantee. The problem was Casey came to believe that prices could only go up and progressively he increased his wager.
As Casey’s property development business grew over the course of the boom years, he continued to use it as a guarantee to cover his position, gradually increasing his shareholding in the National Dublin Bank to thirty percent of the bank’s total share capital. That was fine as long as prices went up, but with the collapse of property values and the subsequent collapse of Irish banking shares Casey was hit by a double whammy. Under the burden of failed property loans, the National Dublin Bank collapsed, as did other leading Irish banks. From a peak of twelve euros, the value of the shares Casey held fell to a mere twenty cents, a calamity that led to the nationalization of the bank.
Casey had squandered the fortune he had built up in a senseless gamble on the notoriously reckless National Dublin Bank. Casey, like the banks, had become addicted to leverage at a time when Ireland had become intoxicated by it. His disastrous investment in National Dublin Bank cost Casey Holdings more than one billion euros.
But Casey still had a trick or two up his sleeve. He decamped to London where bankruptcy laws were less onerous than those in the Republic. There he applied for voluntary bankruptcy in London’s High Court. In Ireland he would have been banned from running a business for up to twelve years, whereas in the UK, Casey would be debt-free in a year, in spite of the billions he owed. That did not however prevent the Court from seizing his properties and just about everything else he possessed to cover his debts.
Chapter 45 LONDON