EBS confirms talks with group of private equity investors

EBS CHIEF executive Fergus Murphy has confirmed that the building society is in discussions with a group of private equity investors led by Cardinal Asset Management which could see the private equity group potentially take a majority stakeholding in the building society. Mr Murphy said while discussions were at an early stage, a “good assessment” would be reached within two months.

“The soundings are good, but the devil is in the detail.”

Cardinal, which is controlled by businessmen Nick Corcoran and Nigel McDermott, was part of the Irish-led Mallabraca consortium, which included foreign investors, that expressed an interest in Bank of Ireland in autumn 2008.

The confirmation from Mr Murphy that the discussions with Cardinal are ongoing comes after the chief executive of Irish Nationwide said on Monday that the plan to merge with EBS was on hold.

The Government had been mooting the idea of a “third banking force”, formed through the merger of Irish Nationwide and EBS, to rival the dominance of the other main banks.

Mr Murphy stressed yesterday that while the talks with the group of private equity investors were progressing, “all of the options are still possible” regarding the future of EBS. The building society is being advised on its various options by KPMG and NCB.

He echoed the views expressed by Irish Nationwide chief Gerry McGinn on Monday that the requirement for both building societies to prepare viability plans for the European Commission had put any merger plans on hold.

The EBS intends to submit its plan to Brussels by June.

Mr Murphy said if a private equity deal is reached all or some of the capital required by the EBS could be provided by the private consortium rather than the Government.

Last month EBS was instructed by the financial regulator to raise €875 million of new capital by the end of the year.

Minister for Finance Brian Lenihan said the Government would provide the funds necessary if private capital was not forthcoming.

Mr Murphy said yesterday that the question of the provision of the capital would possibly be “a conversation for the investors and the Government”.

Mr Murphy also said yesterday that the “worst may be over” in terms of mortgage arrears. Some 5 per cent of the building society’s residential mortgages are in default, he said, a figure that was within the building society’s estimates.