THE STATE'S largest stockbroking firm, Davy, is planning to cut as many as 75 jobs - up to 15 per cent of its 520-strong workforce - and to seek pay cuts from its remaining staff due to reduced trading volumes in the turbulent financial markets.
The firm said in a statement that it has started "a consultation process with employees regarding proposals to rebalance its cost base". The company said the proposed cost reduction programme is "likely to include some redundancies , some salary adjustments as well as a thorough review of business overheads".
Davy is seeking a 5 per cent pay cut from staff on any of their annual earnings over €50,000.
A spokesman for the firm said "a significant part" of the redundancies would be from the private clients business, a strongly profitable division of the firm in recent years. The division, which employs about half of the firm's staff, has been affected by the sharp downturn in the equities and investment markets. As many as 50 jobs could be cut from this division.
Davy managing director Tony Garry said in January 2007 that the firm was aiming to double its profits to €100 million within five years, driven mainly by the growth in its private clients business.
The company said in its statement yesterday: "The turbulence in international and domestic financial markets over the past 18 months has reduced trading volumes and there is a requirement to adjust the cost base in order to protect the profitability of the business."
Equity markets fell 20 per cent last month, by 30 per cent over the last two months and by 55 per cent from their peak last year.
The spokesman for the firm said it was a profitable business and would continue to make profits.
A spokesman for rival firm Goodbody Stockbrokers said it had no plans to seek any redundancies. It's understood that Merrion Capital has no plans to seek redundancies.
NCB Stockbrokers recently announced that it was seeking 10 job cuts from its staff of 180.
Gerardine Jones, managing director of Dolmen Securities, said the firm "ran a very tight ship", and had no plans to cut any jobs.
Davy has offices on Dawson Street and Molesworth Street in Dublin city centre. It has regional offices in Cork, Galway and Belfast. The job cuts are expected to affect all operations, though final redundancies will be agreed following consultations with staff, the firm's spokesman confirmed.
Employees who bought shares in the firm in the €316.55 million management-led buyout of the business from Bank of Ireland in 2006 must sell their stakes, as departing staff are in general not allowed to hold shares.
Up to 110 senior staff purchased stakes in the firm in the buyout. There is a mechanism within the firm by which departing employees can sell their shares, but the precise details of share sales will be decided in consultation with staff.
Davy has offered to cover losses incurred by credit unions on investment bonds bought from it before the collapse of the markets. The firm made a provision for €35 million in its 2007 accounts by agreeing to place this amount in an investment bond aimed at covering the losses incurred to date.
The firm's offer has been endorsed by the Irish League of Credit Unions. However, individual credit unions have until this Friday to accept the offer. Davy has met credit unions over the last two months and hopes to receive acceptances from 85-95 per cent of the credit unions involved.
