State to hire financial consultants to advise on options for bank shareholdings

Potentially lucrative appointments expected to attract international attention

The State currently owns 99.8 per cent of AIB, 99.2 per cent of PTSB and about 15 per cent of Bank of Ireland. Photograph: Cyril Byrne

The State currently owns 99.8 per cent of AIB, 99.2 per cent of PTSB and about 15 per cent of Bank of Ireland. Photograph: Cyril Byrne

 

The Department of Finance is looking to hire consultants to advise it on strategic options for the State’s shareholdings in AIB, Bank of Ireland and Permanent TSB.

The department issued a tender notice on Wednesday seeking to appoint financial advisers to three panels.

The first covers capital markets, strategic, mergers and acquisitions (M&A) and restructuring advice. Consultants will be expected to assist in the structuring of a sale process to ensure the State achieves “optimal execution” in the sale of shares, preference shares, contingent capital notes (CoCos) and equity-linked products relating to the three banks.

In addition, they would assist in the formulation of the department’s privatisation strategy, “executing strategic transactions and general policy making with regards to the banking sector”.

The second panel covers the provision of general financial advice relating to “proposals/ new developments, due diligence [and] modelling or analysis in the financial services sector”. This could include providing accounting, taxation, strategic, M&A, valuation, restructuring, pension and actuarial advice, and advice around payroll, governance standards, regulation, compliance and risk.

Bookrunner The third panel relates to capital markets distribution services. This would involve a bookrunner and co-lead manager for the sale and distribution of securities.

“The department reserves the right to appoint one or more bookrunners as global co-ordinators at the time of a transaction and to appoint a co-ordinator in a retail offering,” the document states.

The deadline for tenders is July 11th with appointments expected in the autumn. The department plans to select at least five tenderers for appointment to each panel.

Groups tendering for the first and third panels must show that they have minimum turnover of €15 million. Those pitching for the second panel must show that they have minimum turnover of €5 million.

These potentially lucrative appointments would be expected to attract interest from domestic and international corporate advisers.

Law firms The department has already appointed seven law firms to a legal panel that will be used to advise on financial matters. Arthur Cox, A&L Goodbody, Byrne Wallace, Mason Hayes & Curran/Norton Rose, Matheson, McCann Fitzgerald and William Fry were all chosen following a recent tendering process.

The State currently owns 99.8 per cent of AIB, 99.2 per cent of PTSB and about 15 per cent of Bank of Ireland. These appointments reflect the Government’s desire to attract private investment into the banks and recoup as much as possible of the €64 billion used to bailout the financial sector.

To date, it has received about €6 billion back from Bank of Ireland and €1.3 billion from the sale of Irish Life.

AIB chief executive David Duffy said recently that he is working towards being ready to test the market for external investment in the first half of 2015.

Permanent TSB chairman Alan Cook told shareholders at its annual meeting this week that the board believes the bank could be returned to private hands by 2017.

The department’s tender documents states that it continues to “execute a strategy for realising the value of its shareholdings in an orderly and active manner over time”.