Davy puts itself up for sale 10 days after eruption of scandal

The offices of Davy stockbrokers in Dublin. File picture: Niall Carson/PA Wire

Davy has put itself up for sale as Ireland’s largest stockbroker scrambles to contain a scandal that recalled the worst excesses of the Irish financial services industry during the boom-and-bust years.

In a short statement, the broker said it had appointed Rothschild as an adviser in the sale.

The announcement – less than 10 days after the Central Bank revealed the full scale of the firm’s wrongdoing in a 2014 bond transaction – formally fires the starting gun in a sale process of the firm that commands a huge slice of the pension and wealth advisory business in the Republic and the North. 

It will be attractive for a new owner despite the fallout but it could go for a discounted price to the €400m it was worth, by some estimates, before the eruption of the crisis.

The sale means the Davy board has acted to limit even more financial fallout but former key management shareholders who were involved in a contentious 2014 deal will benefit from the sale of the firm regardless.

The scandal erupted last week after Davy was fined €4.1m by the Central Bank for its failure to supervise a group of 16 of its own employees — which included management owners — in their 2014 profiting from personal dealings in the sale of Anglo Irish bank bonds.

Davy appeared at first to play down its culpability but last weekend a trio of senior personnel and prominent shareholders exited, including chief executive Brian McKiernan, Kyran McLaughlin as deputy chairman, and head of bonds Barry Nangle.

As the political row intensified, the NTMA moved earlier this week to strip Davy of its prestigious role as a Government-nominated primary dealer in selling Irish sovereign bonds, in which Davy effectively represented the State around the world.

A group of key shareholders who profited but were not named by the Central Bank from the 2014 deal hold a significant stake in the firm.

Bank of Ireland — in which the Government owns a 14% stake — has reportedly made an early-stage approach to buy Davy, a move that would further adversely consolidate financial services here.

Any buyer will seek to indemnify itself from subsequently finding more “skeletons in the cupboard”, said Professor Niamh Brennan, an expert in corporate governance.

Meanwhile, Finance Minister Paschal Donohoe said he was supportive of the decision.

"Davy is an important financial services firm employing approximately 700 people with a diverse range of institutional, retail, charity, credit union and corporate clients,” he said.

“It is important to have a stable, well managed, local stockbroking community to support indigenous companies. For this reason I am supportive of this evening’s announcement."