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Bank of Ireland agrees to buy bulk of Davy stockbrokers for 440 million euro

The sale comes months after Ireland’s largest stockbroking firm was fined for breaching rules surrounding a bond deal in 2014.

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Bank of Ireland has reached a deal to buy most of Davy stockbrokers for an enterprise value of 440 million euro (Niall Carson/PA)

Bank of Ireland has reached a deal to buy most of Davy stockbrokers for an enterprise value of 440 million euro (Niall Carson/PA)

Bank of Ireland has reached a deal to buy most of Davy stockbrokers for an enterprise value of 440 million euro (Niall Carson/PA)

Bank of Ireland has reached a deal to buy most of Davy stockbrokers for an enterprise value of 440 million euro.

The sale comes months after Ireland’s largest stockbroking firm was fined for breaching rules surrounding a bond deal in 2014.

Bank of Ireland said it would buy the wealth management, capital markets and associated businesses of J&E Davy.

Bank of Ireland said it will also pay 125 million euro for excess cash at the completion of the deal, which will be largely comprised of the proceeds from different disposals.

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The offices of Davy stockbrokers in Dublin (Niall Carson/PA)

The offices of Davy stockbrokers in Dublin (Niall Carson/PA)

PA

The offices of Davy stockbrokers in Dublin (Niall Carson/PA)

In March, the Central Bank of Ireland reprimanded and fined Davy 4.1 million euros in respect of breaches of the European Communities (Markets in Financial Instruments) Regulations 2007 that occurred over different intervals between July 2014 and May 2016.

Bank of Ireland said that 25% of the enterprise value will be paid two years after completion.

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In addition, further payments of up to 40 million euro will be payable from 2025.

Davy has separately announced today that it is selling Davy Global Fund Management (DGFM) and its shareholding in Rize ETF to separate third parties.

Founded in 1926, Davy manages in excess of 16 billion euro of client assets and employs over 800 people, including 83 employed by DGFM.

The company has offices in Dublin, Cork, Galway, Belfast, and London.

It is our ambition to build on Davy’s unrivalled leadership position in these businessesFrancesca McDonagh

Bank of Ireland said that acquiring Davy will “materially increase the group’s wealth and fee income”.

“The acquisition is expected to be accretive to earnings in the first full year of ownership, excluding transaction related payments,” a spokeswoman said.

“Acquiring Davy strongly supports the group’s commercial and strategic objectives.

“Growing the wealth and insurance business is a stated strategic priority for the Group, with the aim of unlocking growth opportunities in Ireland, increasing fee income, and generating sustainable profits.”

Bank of Ireland’s wealth and insurance business currently has over 600,000 customers, including more than 250,000 wealth customers.

Ireland’s Minister for Finance Paschal Donohoe said the announcement brings to an end an “uncertain period” for Davy.

“It provides it with a well-capitalised owner providing opportunities for growth, which will support the wider needs of the Irish economy and businesses,” he added.

“This transaction provides Bank of Ireland with growth opportunities as it expands its product range in the high net worth and mass affluent categories.

“Furthermore, it supports the bank’s stated strategic priority of growing the wealth and insurance business with the aim of unlocking growth opportunities in Ireland, increasing fee income, and generating sustainable profits.

Francesca McDonagh, group chief executive of Bank of Ireland, said: “When we look at any acquisition, we consider two key things, if it offers value to our shareholders, and if it is a good fit for our business.

“Davy scores very highly on both.

“Wealth management and capital markets are important parts of our business.

“Bringing Davy into the group represents a significant milestone which will considerably enhance our customer offerings and growth outlook for the group.

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Davy Stockbrokers in central Dublin (Julien Behal/PA)

Davy Stockbrokers in central Dublin (Julien Behal/PA)

PA

Davy Stockbrokers in central Dublin (Julien Behal/PA)

“It is our ambition to build on Davy’s unrivalled leadership position in these businesses, while also enabling it to benefit from a range of comprehensive culture, risk and governance programmes that we have successfully introduced in recent years.

“Accordingly, we see a continuation of the Davy brand and structure, under the Bank of Ireland umbrella.

“We welcome the Davy team and all of Davy’s clients to Bank of Ireland.

“We look forward to growing our business and enhancing customer propositions across the entire Group in the years ahead.”

Bernard Byrne, interim chief executive of Davy, added: “Our view throughout this sales process has been that the right owner for Davy is the owner that is right for our client base and people.

“We are confident that in Bank of Ireland we are joining a group that supports our vision for the business and presents significant opportunity for all stakeholders, particularly for our clients in supporting their growth ambitions.”


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