Bank of Ireland says it has completed its €427 million takeover of Davy Stockbrokers. The lender said the deal, which was announced last year in the wake of a financial scandal that saw the broker fined €4.13 million, would significantly enhance the bank’s commercial and strategic objectives. Davy had assets under management of about €20 billion at the end of 2021 and Bank of Ireland said combining its existing wealth and insurance assets under management of about €22.5 billion provides it with “significant scale and breadth of proposition”.
“Along with the KBC Bank Ireland portfolios transaction, which recently received Competition and Consumer Protection Commission approval, completion of this acquisition demonstrates further strategic progress by the group,” it said.
Under the terms of the deal, Davy was bought for a final consideration of about €427 million after adjusting for the capital position of Davy as of June 1st 2022.
Some 25 per cent (€107 million) of the enterprise value will be paid two years after completion, subject to Davy shareholders meeting a number of agreed criteria, the bank said.
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In addition, as announced in July last year, Bank of Ireland will also pay for excess cash which amounts to €126 million, following the sale earlier this year of Davy Global Fund Management and Davy’s shareholding in Rize ETF. A further payment of up to €40 million will be payable from 2025, “contingent on future business model performance,” it said.
Embattled stockbroker Davy was put up for sale after it was fined a record €4.13 million by the Central Bank for breaching market rules. The broker had sold a Davy client’s bonds to a consortium of 16 people who happened to work for Davy, without notifying the compliance team. The scandal saw the broker dropped as a primary dealer in Government bonds, triggering the closure of its bond desk.
Welcoming the Davy team and clients, Bank of Ireland chief executive Francesca McDonagh described the deal as an important strategic acquisition. “As the unrivalled Irish leader in wealth management and capital markets, we are ambitious for the future of Davy within the group,” she said.
