Davy locks local rival Cantor Fitzgerald out of sale process

Bank of Ireland widely considered to be the most likely buyer

 Davy: have been grappling since early last month with the fallout from a €4.1 million Central Bank fine and reprimand.  Photo: Sasko Lazarov/Rollingnews.ie

Davy: have been grappling since early last month with the fallout from a €4.1 million Central Bank fine and reprimand. Photo: Sasko Lazarov/Rollingnews.ie

 

Davy has decided to shut Cantor Fitzgerald out of the sales process for the embattled stockbroker, citing concerns over giving sensitive information to what it sees as the only direct competitor among potential bidders.

The largest securities firm in the State put itself up for sale last month as it seeks to rebuild trust in the business and address concerns about former senior executives involved in a bond-deal scandal in 2014 remaining as major shareholders.

Cantor Fitzgerald Ireland’s chief executive, Ronan Reid, confirmed to The Irish Times that his firm was initially invited into the sale process through Davy’s advisers, investment bank Rothschild.

“However, we reached an impasse with their advisers over a required confidentiality agreement, where the request was for us to commit to not hiring staff nor seek to sign Davy clients, arising from anything we would learn from the process,” he said in response to questions.

“We could not agree. It’s a commercial market and we have never, to my knowledge, agreed to restrict clients’ movement in prior NDAs [non-disclosure agreements] in potential acquisitions.”

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Mr Reid said his firm was subsequently informed that Cantor would not be taken forward in the process “because we are such a direct competitor, as they saw it, [and] the only potential bidder to fall into that category and their concern was giving sensitive information to a rival player in the market”.

He said that he was commenting because his staff are being asked regularly about the matter, following reports in the past month that cited Cantor as a likely bidder for Davy.

Market rules

A spokesman for Davy declined to comment.

Bank of Ireland is widely considered to be the most likely buyer of Davy, which has been grappling since early last month with the fallout from a €4.1 million Central Bank fine and reprimand.

Davy breached market rules by failing to identify whether a conflict of interest existed as 16 of its employees, including top executives, bought junior bonds in Anglo Irish Bank from a client in November 2014 without disclosing that they were the buyers. The regulator also found that Davy kept its own compliance officials in the dark on the deal.

A sale process is expected to take take months. Swiss wealth management group Julius Baer has been reported as being interested in a deal, while private equity firms are also expected to bid. Many potential suitors are said to be more interested in the wealth division, which has more than €14 billion of assets under management.

Davy was estimated to be worth about €400 million before the scandal damaged the brand but any deal is likely to be done at a discount.