BofI agrees to sell asset management arm for €57m

BANK OF Ireland has agreed to sell its asset management arm to US financial services giant State Street for a cash consideration…

BANK OF Ireland has agreed to sell its asset management arm to US financial services giant State Street for a cash consideration of about €57 million.

Bank of Ireland Asset Management (BIAM) is one of three units being sold as a condition of European Commission approval for the bank’s € 3.5 billion recapitalisation by the Government.

The transaction is conditional upon certain regulatory approval, but is expected to be finalised by the first quarter of 2011.

BIAM’s workforce of over 120 will continue as Bank of Ireland staff until the process is completed, and will then transfer to State Street Global Advisors (SSGA).

Greg Ehret, SSGA’s head of Europe, the Middle East and Africa, said the company would probably look for a new premises in Dublin rather than relocating BIAM staff to its Irish headquarters on Sir John Rogerson’s Quay in the capital’s docklands.

State Street already has a large presence in Ireland, employing more than 2,000 staff in Drogheda, Dublin, Kilkenny and Naas. This is about 20 per cent of employees in the Irish funds industry. In August, the Boston-based company signalled it was seeking to expand its actively-managed investments through acquisitions and reduce its reliance on passive funds. Commenting on the disposal, a spokeswoman for Bank of Ireland said “the key thing for the group is that it fulfils our disposal commitments to the European Commission, and they [BIAM] will continue to be important providers of investment products for the group”.

Australian group Macquarie had been in talks to take over the Dublin-based asset manager but dropped out of the process.

BIAM had assets under management of about €26 billion as at September 30th. In recent years it has lost its position as the State’s largest investment manager to Irish Life Investment Managers.

Two other units within the Bank of Ireland group – ICS Building Society and life and pensions company New Ireland – are also on the market as a condition of recapitalisation. However, the bank said yesterday it does not envisage that either of the businesses will be sold “until at least some time next year” as these disposals will be “much more complex” compared with BIAM.

Bank of Ireland also announced yesterday that the UK high court had approved its proposal to transfer a substantial part of its UK banking business to a new subsidiary, Bank of Ireland UK.

“The establishment of Bank of Ireland UK demonstrates our commitment to the UK market. It will enable us to grow our business and continue to support our customers in the UK.”