Former shareholders in Davy, who were effectively forced to put the company up for sale two years ago in the wake of a regulatory fine over a bond-trade scandal, have put down a clear marker ahead of an expected €100 million-plus payday next year.
Ailmount Investments, which was the ultimate holding company above Davy and where its 30 shareholders include former top figures at the firm such as Brian McKiernan, Kyran McLaughlin and Barry Nangle as well as a number of current employees, this week launched High Court proceedings against Bank of Ireland, which bought the brokerage in a €427 million deal. The takeover was completed in June last year, almost 11 months after it was agreed.
At issue is what’s understood to be a relatively minor amount Ailmount believes it is due, as a result of a reduction in Davy’s regulatory capital requirements since the deal was struck.
A spokesman for Bank of Ireland said in a statement that the “technical point on capital is the focus of the current issue”. “The bank is committed to seeing that all obligations with respect to the Davy acquisition are performed, while also being mindful of its responsibilities to the bank’s stakeholders and shareholders in doing so,” he added.
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There is a tacit acknowledgment in the statement that the bank may need to make some sort of payment to the Ailmount guys – albeit subject to final clarity on the matter.
However, the lawsuit will be seen by both sides as sending a signal that Bank of Ireland will face a strong challenge if it looks for excuses to chip away at the final amount that’s expected by Ailmount next June, two years after the completion of the deal.
Some 25 per cent – or almost €107 million – of the consideration has been held over until then, subject to various conditions being met. Close to 60 per cent of the amount is due to people who are no longer employees of Davy, based on figures contained in Bank of Ireland’s latest annual report.
