FEXCO ready to buy Goodbody

THE cash-rich Co Kerry-based financial services company FEXCO is on the cusp of buying Goodbody Stockbrokers from Allied Irish Bank.

The Killorglin-based company, led by chairman Brian McCarthy, already has a small stockbroking arm, but has long harboured ambitions to become a major player in the Irish stockbroking market.

AIB and FEXCO both gave “no comment” responses when contacted by the Irish Examiner on the ongoing discussions between the parties.

Goodbody is understood to have made losses in recent quarters and a putative management buyout never got off the ground because of a lack of finance.

No price tag has been placed on the Goodbody operations by AIB who regard the brooking house as a non-core business. However, it is expected it could be purchased for a cash price in the low ten millions at most – a fraction of the €316m management buyout at rival Davy Stockbrokers in 2006.

FEXCO is well positioned to buy Goodbody having sold its money transfer operations to Western Union for €123m early last year.

However, regulatory requirements will require significant liquid assets to be in place and any buyer will have to be in a position to provide significant long-term securities to have the acquisition approved.

FEXCO will have no problems providing sufficient capital to cover regulatory requirements.

Goodbody has close to 250 staff, but FEXCO’s experience in back-office management could enable it to make significant savings, as well as leveraging its proven information technology expertise to expand the Goodbody franchise to more retail customers via the internet.

And AIB shares rose 10.3% amid speculation the lender will reach agreement on the sale of its stake in US bank M&T Bank Corp.

“The commencement of the disposal process should give investors some confidence on progress ahead of the year-end capital raising deadline,” analyst Eamonn Hughes at the company owned Goodbody Stockbrokers said in a research note.

“Every €10 on M&T equates to €200m of additional gains for AIB, so a $115 price tag would generate an additional €600m of capital for the bank.”