Central Bank in talks over Bloxham closure

CENTRAL BANK officials have met Bloxham financial partner Tadhg Gunnell for the first time since it directed the stockbroking firm to cease operations last weekend.

Officials met Mr Gunnell on Thursday with his solicitor to discuss the accounting irregularities he disclosed to the other Bloxham partners that led to his suspension from the firm and the closure of the country’s oldest stockbroker.

A spokesman for the Central Bank had no comment to make on the meeting, while Mr Gunnell has made no public comment on his role in the closure of the firm.

Staff at Bloxham were told yesterday morning by liquidator Kieran Wallace of KPMG that they would not be paid wages for June, having been told on Monday by the stockbroking firm’s managing partner Pramit Ghose they would receive the month’s pay.

Mr Wallace was appointed provisional liquidator on Thursday after Bloxham’s partners petitioned the High Court to wind up the firm over the €5.3 million capital shortfall left as a result of the accounting discrepancies. The liquidation means all employment contracts are void and staff being made redundant will only receive their statutory entitlement of two weeks’ pay per year of service.

There are 49 staff being laid off, though Mr Wallace may rehire up to 15 employees to manage the wind-down of the firm.

Some 21 staff are moving to rival Davy following its purchase of Bloxham’s private client and wealth management businesses for €5.8 million last weekend.

Davy had already agreed the purchase of the private client business for an upfront payment €2.2 million and an extra payment of between €3 million and €5 million based on future earnings.

In response to its financial difficulties, Bloxham agreed to drop the entitlement to future earnings to accelerate the sale to Davy. It also sold the wealth management business for a further €3.6 million.

Another stockbroker, Merrion, has hired Bloxham’s bonds staff, having previously been in talks with the firm about buying its three remaining businesses following the sale of the private client business to Davy.

Merrion, which does not have a bonds business, broke off discussions with Bloxham on a purchase of the institutional equities, bonds and wealth management businesses after the financial irregularities emerged on May 23rd.

It has also emerged that the €2.6 million of trading losses incorrectly accounted for at Bloxham arose from dealings on shares in Independent News and Media and investment firm TVC Holdings.

Proprietary trades on these as well as shares in AIB and building materials group CRH made losses, but were incorrectly booked as assets on the firm’s books.

A source close to the partners said they had hoped to keep Bloxham open, but the Irish Stock Exchange’s decision to suspend its membership of the market on Monday left them with no alternative but to wind up the business.

It is understood the partners feared if they kept trading they could damage the value of their stake in the exchange which they estimated to be worth €6.25 million in their 2011 accounts.