IT'S BEEN a busy week for Davy. On Monday, the State's biggest stockbroker announced details of a potential settlement with credit unions to compensate them for the steep decline in the value of investment bonds sold in 2004 and 2005.
Davy made a provision of €35 million in its 2007 accounts and hopes this offer will draw a line under a long- running dispute, which has thrust the normally media- shy group into the spotlight and involved it in five legal actions with credit unions.
The offer is open to those credit unions which have taken the legal route to gain compensation.
Davy was recently ordered by Financial Services Ombudsman Joe Meade to buy back €500,000 worth of bonds from Enfield Credit Union at face value. Davy is taking two High Court challenges to this ruling and Enfield might well decide to take the offer on the table rather than await the outcome of the legal proceedings.
That would present an interesting dilemma for Davy.
Does it pursue its judicial review of the process used by the ombudsman in reaching his decision or let the matter lie? Taking the matter to court could open the inner workings of the stockbroker to public scrutiny, while not challenging the decision could have consequences for the firm down the track.
Davy was also the subject of unfounded rumours that it was about to make a large percentage of its 540 staff redundant in response to the economic downturn.
On the contrary, Davy tells us that all of its staff are fully occupied in spite of the difficult stock market conditions and business activity is good.
The stockbroker is planning to expand its office space on Dawson Street to accommodate staff who are based on nearby Molesworth Street and bring its Dublin staff under the one roof.
Davy's ownership structure changed in 2006 when 150 employees acquired Bank of Ireland's 90.44 per cent stake in the business for €316 million. It is understood that the outstanding debt has been reduced to less than €250 million. It paid €15 million in interest payments last year.
In an interview with The Irish Times in January 2007, Davy boss Tony Garry said it wanted to double its profits to €100 million within five years.
Stock market events in the interim will probably push that deadline out somewhat.
With a hefty debt still to pay down, Davy's owners will no doubt be hoping for an significant upturn in activity in the near future.
