NCB faces an uncertain future

The future of NCB Stockbrokers remains uncertain after attempts to agree a management buyout (MBO) appear to have foundered.

Staff at the broker were told late last week that the MBO, led by managing director Mr Conor O'Kelly and backed by venture capital group Alchemy, would not be going ahead.

NCB did not return calls yesterday while a spokesman for Ulster Bank, which owns the stockbroker, declined to comment. But market sources suggested that the MBO had foundered not on price, but due to management failure to agree.

The collapse of the MBO attempt follows the breakdown earlier this year of talks with CIC Securities, the stockbroking arm of French banking group Crédit Mutuel, on the purchase of NCB from Ulster Bank's parent, Royal Bank of Scotland (RBOS).

It also leaves NCB with limited options. "It's a sitting duck at the moment," one stockbroking source said.

Among the options facing NCB are integration back into Ulster Bank, which could then wait until market conditions improve to sell it. But this course of action runs the risk of triggering widespread defections in a business where people are among the most valuable assets.

Rival stockbrokers would not be slow to try to poach NCB's best people. For instance, Davy, which recently lost a number of staff from its private client department, could be expected to raid this division at NCB, while certain staff on its corporate finance, institutional dealing and research desks would also prove attractive to rivals.

NCB's difficulties could also prompt its two main bank-owned rivals to take a look at the stockbroker, currently ranked third in the Irish market. Given the view in some quarters that the Irish market cannot sustain the current number of brokers, a move by AIB, which owns Goodbody, or Davy parent Bank of Ireland on NCB could make sense.

The final option is for RBOS to try to agree a sale of the broker to a third party, a solution that has eluded the Scottish bank to date but may again be under consideration.

The uncertainty over the future ownership of NCB is unlikely to make life easier for its staff when competing for business in difficult market conditions.

Market sources said the corporate finance and private client sides of the business in particular could find the going tough, but institutional investors who trade through the broker would also like to see the current uncertainty lifted.

"On a day-to-day basis, it's business as usual. But on a strategic basis, you would like to see the issue of ownership resolved," one fund manager said.