BoI sells Chase de Vere for €30m

BANK OF IRELAND finally cut its losses with an ill-fated British subsidiary yesterday by selling Chase de Vere for €30 million, a fraction of the €170m the bank paid for it.

The bank had already written off its entire investment in the troubled financial advisory business, which was bought five years ago but subsequently failed to live up to expectations.

Chase de Vere specialised in providing independent financial advice to private clients, as well as to businesses seeking to run employee benefit schemes.

The investment resulted in a €93m hit to last year’s profits, almost 10% of the total.

German financial giant AWD will take over the company later this month, when the deal gets clearance from the FSA, the British financial regulator.

AWD’s financial services business has more than 400 branches across central Europe, with offices in Germany, Austria and Switzerland as well as a substantial existing business in Britain. Roy Keenan, the troubleshooter chosen by Bank of Ireland to clean up its British operations, said the deal would allow the bank to focus on its core operations.

These include business banking, consumer and mortgage lending, and a joint venture with the British Post Office to sell financial services through its network.

The final sale value is substantially lower than the €38m that was speculated by market sources last month. The price suffered from a shortage of potential buyers willing to take on the ailing business, whose image took a dent in 2003 after the FSA fined it £165,000 (€235,000) for its conduct in selling high-risk investment products.

Yesterday’s deal will also allow the bank to concentrate on completing the strategic review of its presence in Britain.

It is examining its options on Bristol & West, the former building society taken over by the bank in 1997. Bristol & West has already undergone major surgery to get its cost base into line, with the closure of more than 30 of its 130 branches.

Chief executive Brian Goggin last year said that Bristol & West’s function as a deposit taker could be performed more efficiently through direct channels such as phone or internet-based operations.

Its home loans business has also struggled in the face of intense competition in the cut-throat British mortgage market. Investors looked kindly on yesterday’s news, easing the bank’s share price up almost 1% to €12.75.