Bank of Ireland to buy bulk of Davy Stockbrokers

0
44

Article content

DUBLIN — Bank of Ireland agreed to buy most of Davy Stockbrokers for an enterprise value of 440 million euros ($518 million) on Thursday, four months after a record central bank fine forced Ireland’s largest stockbroker to put itself up for sale.

An inquiry into 16 staff members at Ireland’s largest stockbroker found they sought to profit in 2014 by taking the opposite side of a bond deal with a client, without telling the client or compliance officials.

Davy was fined 4.1 million euros by Ireland’s central bank in March for breaching market rules and was dropped as a primary dealer in Irish government bonds amid a public outcry, leading to the closure of its bond desk.

Advertisement

Article content

Bank of Ireland said the wealth management, capital markets and associated businesses it is acquiring will continue to trade under the Davy brand and will be led by the management team that has overseen the sales process and “has evolved significantly over recent years.”

The 16 identified in the central bank probe included Davy’s then chief executive, Brian McKiernan, who quit alongside its deputy chairman and head of bonds in the aftermath of the fine.

Davy is Ireland’s largest wealth manager, managing over 16 billion euros of client assets, and a corporate broker for some of the largest firms listed on the Irish stock exchange.

It is an independent company wholly owned by management, staff and former employees, including McKiernan and others who quit over the scandal.

Advertisement

Article content

Bank of Ireland said it will also pay for around 125 million euros of excess cash at completion of the deal, largely comprised of proceeds from the separately announced sale of Davy’s fund management unit to Luxembourg-headquartered IQ-EQ and a shareholding in UK-based Rize ETF.

Ireland’s largest bank by assets has been seeking to expand, including in its wealth and insurance businesses. It is also in talks to buy the bulk of Belgian bank KBC’s Irish assets.

Ireland’s other dominant lender, Allied Irish Banks , agreed in March to buy one of Davy’s main rivals, Goodbody Stockbrokers, as it also pushes to expand its revenue beyond retail banking.

($1 = 0.8477 euros) (Reporting by Padraic Halpin; editing by Joe Bavier and Jason Neely)

Advertisement

In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.

    Comments

    Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.