Bank of Ireland 'makes early-stage approach to buy' scandal-ridden broker Davy

 Picture: Andy Gibson.

Bank of Ireland — in which the Government owns a 14% stake — has made an early-stage approach to buy Davy as the future of ownership of the scandal-ridden stockbroker appears to be up in the air.

Any purchase of Davy by Bank of Ireland would involve the bank buying back the broker it owned before a management-led buyout of the firm during the property boom around 15 years ago.

The scandal around Davy — Ireland’s largest stockbroker — exploded last week after it was fined €4.1m 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.

Calls for an inquiry

It developed into a political crisis amid calls for all of Davy’s boom-and-bust time dealings over the past 15 years to be investigated.

Davy was also stripped this week of its lucrative role as a primary dealer to the State’s National Treasury Management Agency in which it had access to the sale of sovereign government bonds over the past 30 years.

The Irish Times first reported that Bank of Ireland has made an exploratory approach to Davy should the broker decide to seek a buyer. A Bank of Ireland spokesman made no comment on the report.

Some of the biggest shareholders in Davy were part of the controversial 2014 transaction that led to the Central Bank imposing the fine on the firm.

Its five-year investigation into Davy published last week said that Davy lacked “candour” when regulators first started asking questions.

Extended reach

Any deal involving the Bank of Ireland buying back Davy would also mean the Government would extend its reach over Irish financial services industry.

AIB — in which the Government owns 71% — is in the final stages of buying back rival stockbroker Goodbody.

Separately, AIB and the Government-75%-owned Permanent TSB are also involved in potential deals to buy parts of the €20bn loan books of Ulster Bank, which is pulling out of the banking market in the Republic altogether.