Eamon Quinn: Like other Irish financial scandals, Davy crisis appears to be blowing over       

Finance committee chairman says we need answers from the stockbroker — but it looks like there will be few consequences

Oireachtas finance committee chair, John McGuinness, said Davy, Bank of Ireland, and the Central Bank still have questions to answer. File picture: Leah Farrell

Scandals in Ireland involving financial firms take on a familiar shape: First the outcry when misconduct or wrongdoing is exposed, and then the consequences that amount to very little. 

Before the financial crash, AIB weathered letting unsupervised rogue trader John Rusnak lose it $691m, while, around 20 years ago, Goodbody was allowed by its then owner AIB to questionably trade in AIB shares and hide the dealings in offshore financial centres, far away from scrutiny. 

After the financial crash, the surviving Irish- and foreign-owned mortgage lenders pushed back against their involvement in the €1.5bn tracker mortgage scandal. 

The Davy controversy is following a similar pattern 

The scandal blew up after Ireland's largest broker was fined €4.1m for its failure to supervise its own employees in their 2014 personal dealings in the sale of Anglo Irish bank bonds. It developed into something of political crisis amid calls for all of Davy’s boom-and-bust time dealings over the past 15 years to be investigated thoroughly. The Central Bank investigation criticised the lack of “candour” by Davy when it first started asking questions. 

Following the revelations in March, it took the Government and the NTMA a few days to boot Davy from the roster of primary dealers in Irish sovereign bonds, in which Davy acted as a representative of the State. 

To contain the fallout, Davy subsequently put itself up for sale and appointed consultant Alvarez & Marsal, or A&M, to review Davy dealings, but only starting from the 2014 bond trade. 

Back in March, most industry heavyweights predicted Davy would emerge badly damaged. 

That hasn't happened, however. The sale process concluded earlier today, with Bank of Ireland paying €440m for the bulk of the business, and two other buyers also paying significant sums for its other parts. The beneficiaries include the leading management-shareholders who once ran the firm and who together own 33%, as well as ordinary small staff shareholders who once worked at or are still working in Davy.

Davy and others still have questions to answer

Niamh Brennan, the corporate governance expert, said the large shareholders hadn't suffered any monetary cost. 

John McGuinness, the Fianna Fáil chair of the Oireachtas finance committee, said Davy, its new owner Bank of Ireland  — of which the Government owns a 14% share — and the Central Bank, still have questions to answer. 

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Mr McGuinness was referring to the Alvarez & Marsal (A&M) report which was also published today. The consultant found no dealings that matched the 2014 deal, but found a very small number of deals that were not "subject to adequate (or adequately documented) review at the time". It also recommended Davy "further tighten" its policy over personal dealings, staff training, and whistleblowing.

The Central Bank said it was still "engaged with Davy through our ongoing supervisory work". 

The crisis for Davy appears to be blowing over.