NTMA board strips Davy of dealership just days before €1.5bn auction of State bonds

Scandal-hit Davy was fined €4.1m by the Central Bank last week

The NTMA Board reached its decision based on its assessment of the very serious findings relating to the firm that were made by the Central Bank of Ireland last week. Picture: Sasko Lazarov/RollingNews.ie

The Government’s National Treasury Management Agency (NTMA) which organises sales of sovereign bonds for the State has struck off Davy from its roster of primary dealers just days before a €1.5bn auction in which the scandal-hit broker was due to play a key part.

Davy’s role in Thursday’s auction had become the focus of controversy after senior politicians and corporate governance experts said that Davy shouldn’t be allowed to gain access to a lucrative State-sponsored sale amid a deepening controversy about the stockbroker.

Ireland’s largest broker was fined €4.1m last week by the Central Bank for its failure to supervise a group of 16 of its own employees — including senior personnel and key management owners — in their 2014 profiting from personal dealings in the sale of Anglo Irish bank bonds. The Central Bank had also criticised the firm’s lack of “candour” when it first started investigating the matters five years ago.

A trio of senior personnel resigned their jobs at the firm on Saturday as the political row intensified on the scale of the wrongdoing and the way the board of Davy had initially appeared to play down the seriousness of the findings.

The spotlight fell on Davy’s role as a primary dealer in selling Irish Government bonds, a prestigious contract in which it effectively acts as a representative for the State.

Following a meeting of its board on Monday, the NTMA has now moved to strip Davy from the role and prevent a potentially embarrassing participation in Thursday’s auction by the firm.

In a statement, the NTMA said that Davy’s role as a primary dealer could not continue given the findings of the Central Bank.

“A primary concern for the NTMA is to maintain the reputation of Ireland as a sovereign issuer in the bond market and the orderly functioning of the market for Irish Government debt,” the NTMA said.

“In this context, the NTMA believes that the behaviour described in the Central Bank findings falls substantially short of the standards expected from market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as a sovereign issuer,” it said.

The NTMA board “reached its decision based on its assessment of the very serious findings relating to the firm that were made by the Central Bank of Ireland last week and following engagement with investors in Irish Government debt over recent days”.

The NTMA statement did not identify the investors with which it had contacted.

Last week, the NTMA had written to Davy to request further details about its role in the 2014 bond transaction.