McCole said that he was the manager of the Blanchardstown NIB branch in the mid-1990s, and that Lynn’s solicitors’ practice held business accounts there, but he later closed them.
‘Prior knowledge’
He said he later became a business-banking manager, and a mortgage application by Lynn (pictured) to purchase several properties was referred to him because of his “prior knowledge” of the customer.
He agreed with Finnegan that Lynn had initially proposed a loan-to-value ratio (LTV) of 85%; however, this did not go ahead as it was outside the bank’s guidelines of 80% LTV.
He said Liz Doyle, an assistant of Lynn, emailed the bank after this in December 2006, looking for information about the bank’s lending criteria.
This was followed by an application in early 2007 on behalf of Lynn for a loan of €1.38 million to purchase four specific apartments to provide rental income.
McCole said that the internal credit-application form was prepared by his assistant because he was on holiday.
Criteria
Outlining the general application process for commercial lending, McCole said that a customer would have to meet certain criteria and show an ability to make repayments. He said that a customer would also be expected to provide an “equity stake”, as the bank would lend only 80% of the value of a property.
The application would be assessed by the credit department and, if approved, the customer would be sent the terms and conditions of the proposed loan facility.
McCole agreed with prosecuting counsel that a customer would have to sign to accept the terms and conditions and fulfil any conditions of the loan before drawdown could take place. He said that the terms and conditions would be very important from the bank’s point of view.
The witness said that the bank would receive a letter of undertaking from the solicitor acting for the customer before a loan could be drawn down. He agreed that this letter of undertaking was a promise from the solicitor to register a legal charge on the property in favour of the bank.
Emails between Liz Doyle and NIB from December 2006 and January 2007 were shown to the jury, along with the internal credit application form for Lynn in the amount of €1.38 million.
NIB sent a facility letter to Lynn, dated 13 February 2007, in which the bank set out that it was willing to lend the money, subject to certain terms and conditions outlined within the document.
The witness agreed that the letter contained a section where the customer signs to confirm their acceptance, and Lynn’s signature was dated 2 February 2007.
Legal charge
Letters of undertaking in relation to the four properties were also shown to the jury. These were signed by a solicitor at Lynn’s firm, and were received by the bank in March 2007.
McCole agreed that banks relied on the letter of undertaking, as it could take time to register the bank’s first legal charge over the property with the Land Registry.
McCole agreed with prosecuting counsel that Lynn’s statement of affairs set out a “reasonably healthy position”, which appeared to be signed by the accused man and stamped by a firm of accountants.
The jury was also shown copies of the draft accounts for Michael Lynn and Company, solicitors, to the end of September 2006, as well as practice bank statements and letters of insurance for the apartments.
The jury heard that €1.38 million was drawn down electronically on 16 March 2007, with €5,000 taken off the requested €1.38 million to cover the bank’s charge.
Difficulties
Repayments were made on the loan between April and September 2007.
McCole agreed that he became aware around that time that Lynn had difficulties. When the bank carried out enquiries, it found that other institutions also had an interest in the properties for which NIB provided a loan to Lynn to purchase.
McCole said that he was “totally unaware” that similar undertakings to those given to NIB were also provided to other financial institutions.
Charts were shown to the jury for each of the four properties, showing the date of the NIB mortgage drawdown, along with the dates when mortgages were allegedly drawn down from other financial institutions.
McCole said the application would have been “withdrawn” if he had been aware that another bank had provided money for the same property, or a mortgage was outstanding on it.
McCole told Finnegan that he never spoke with Lynn, but arranged a meeting in Blanchardstown in the months after the drawdown, but the accused did not attend.
He agreed with prosecuting counsel that the facility letter highlighted the importance of the first legal charge in favour of NIB.
The witness said that he was not aware of any other conditions that Lynn or another party might agree with the bank, and had not heard of side deals or secret deals.
He said that the loans were solely provided to buy the four investment properties, and not for investments abroad.
Records
McCole confirmed that he handed over documents from the bank’s records to gardaí in 2009. He told Paul Comiskey O’Keeffe BL, defending, that he collated the documents from the bank’s internal records.
Comiskey-O’Keefe said to McCole that this was “not the first time Mr Lynn has been on trial and not the first time you’ve given evidence”. He put to McCole “last time” that he spoke to his line manager. The witness agreed, but said he could not say who asked him to make a statement to gardaí.
Defence counsel said that Lynn’s position was that the witness contacted him in September 2006 canvassing for business. McCole replied: “As far as I’m aware, I can’t say I did.”
Comiskey-O’Keefe said that Lynn recollected that he told McCole about commitments to other banks. The witness said that he was “not aware of that conversation” and denied that a physical meeting took place.
Defence counsel asked McCole if he had told Lynn that he had contacts in the credit department who could assist him with an application. McCole agreed that he had contacts in the department, but an application would not be approved unless it “stood on its own”.
The trial continues before Judge Martin Nolan and a jury.