Davy buyer will have public trust at its heart, Bernard Byrne promises

Interim chief reassures clients as stockbroker put on sale following bond trade scandal

Davy's interim chief executive, Bernard Byrne, told clients in a video message on Monday that he will personally ensure that the buyer of the embattled stockbroker and wealth management business will have "the sort of capital structure and culture that will underpin public trust and confidence".

Mr Byrne, who took on the role as a number of top executives exited the group earlier this month after a Central Bank fine over a 2014 bond trade hurled the firm into crisis, reiterated the company's apology over the scandal.

The company’s remaining 800 staff were “frankly just as disappointed by what has happened just as anyone else”, he said.

The decision to put the business up for sale “was initiated because we believe that a new owners would provide continuity of service and a strong basis from which to build” for clients and staff, Mr Byrne said. The sale is expected to take months.

The Central Bank fined and reprimanded Davy four weeks ago in relation to a 2014 case where 16 Davy staff, including top executives, secretly bought at a knockdown price an Anglo Irish Bank bond that the firm was given the job of selling for Northern Ireland property developer Patrick Kearney.

He was not told by Davy that it had sold the bond on to a group of its own staff, who wanted to make a profit. Davy’s own compliance team was also kept in the dark.

The fallout has seen any remaining staff that were involved in the trade – including Mr McKiernan, former deputy chairman Kyran McLaughlin and former head of bonds Barry Nangle – exiting Davy, and the firm put up for sale.

Sale process

Davy's board announced on March 11th that it had hired Rothschild to find a buyer. Bank of Ireland, whose rival AIB recently agreed to buy back Goodbody Stockbrokers after a decade, is seen as the favourite to buy Davy, in which it had a controlling stake for 18 years until 2006.

A sale process is likely to flush out further interest and take months. Swiss wealth management group Julius Baer has been reported as being interested in looking at a deal, while industry sources expect Cantor Fitzgerald, which acquired Irish stockbroker Dolmen in 2012, the Irish unit of UK wealth manager Brewin Dolphin, and London-based investment house Permira to express an interest.

“We are all totally committed to working as hard as we can so Davy restores the trust that you rightly expect,” Mr Byrne said.

“I have to be honest and say that neither I nor any other financial institution can say we won’t make mistakes. But what I can say is that when we do, we will deal with them very differently and very transparently.”