State-owned Anglo Irish Bank and Ulster Bank have today won European Union approval to take control of the department store Arnotts.
The landmark Dublin retailer, which employs about 950 people, has debts of about €300 million.
The banks are the backers of the Arnotts planned Northern Quarter development, which has been put on hold.
In a statement issued today, the European Commission said it had formally approved the proposed restructuring of the Arnotts debts in return for a transfer of control to the two banks.
The commission said the transaction would not harm competition in the European Union.
Anglo and Ulster Bank informed the EU of its plan to take control of the retailer late last month.
In a statement, both banks said they are committed to Arnotts but will not be involved in the management of the company.
Instead, retail specialist Mark Schwartz - chief executive of PalladinCapital Group who has worked with the company and bank over the last five months - is expected to oversee the running of the business.
Mr Schwartz reassured staff, suppliers and customers that retailer will continue to play a leading role in the Irish retail market.
“Arnotts is a tremendous business and we need to continue to enhance the shopping experience for our long-standing customers,” he said. “Our goal is to focus on the future, work closely with our strong staff and our suppliers, and create the conditions which will enable Arnotts to thrive for many years to come.”
Arnotts, which opened its doors in 1843, said trading would continue as normal. The banks are understood to be keen to maintain the retailer’s connection with the Nesbitt family – the founders of the business.
The store ran into financial difficulties due to ambitious plans to redevelop the area surrounding its landmark Henry Street store into the so-called Northern Quarter, in what was a €750 million project.
Arnotts invested €10 million on its new Arnotts Project shop in the Jervis Street shopping centre, which was intended to house the department store while the Northern Quarter was being built. It paid €5 million to break its lease in the shopping centre earlier this year.
Arnotts, which has the largest department store in the country, with a selling area of more than 27,000sq m has stressed it intends to continue trading as normal and that jobs are not at risk.
Mandate, the trade union which represents workers at Arnotts said this evening it looked forward to working with the new management of the retailer.
"Now that European Union approval has been granted for the takeover of Arnotts by Anglo Irish Bank and Ulster Bank, we in Mandate are looking forward to engaging on an ongoing basis with the new management of the company regarding the future of Arnotts as a retail business so that we can secure the jobs and terms and conditions of the staff who have contributed so much to the company," said Linda Tanham, Mandate assistant general secretary.
