In early March, on the weekend when Brian McKiernan, Kyran McLaughlin and Barry Nangle all resigned from their various roles in Davy, speculation about a sale was already rife and the most likely buyer was immediately tipped as Bank of Ireland. The very day the Davy fine was announced, Bank of Ireland’s rival AIB snapped up Goodbody.

Some political outrage was expected in relation to the Goodbody deal, given a State-controlled bank was spending €138m when banks might need to use any extra cash to support Covid-ravaged customers.

And AIB even managed to do a deal to keep generous Goodbody salaries and bonuses intact and out of the reach of State remuneration caps.

As it turned out, any bad headlines and political backlash went in the direction of Goodbody’s bitter rival Davy – and boy, was there backlash.

I understand that Bank of Ireland remains in a strong position in the sale process but that two private equity players are also in a strong position at this stage of the process.

Rothschild has been quite clinical in its approach, and quick to exclude any parties that it did not view to be serious bidders.

On the face of it Bank of Ireland is the most suitable buyer, but it would be unwise to rule out a private equity buyer just yet.

A private equity bidder has the potential to pitch a proposal at existing employees of Davy, who are feeling rather battered and bruised at the moment.

Around 35/40pc of the shares are owned by employee shareholders, who are relatively senior but still have a decade or more of their careers left. They are integral to the future success of Davy. Will they want to be owned by a bank?

If a private equity firm suggested they roll over their shares, work with them to build value within the company with an option of buying out the private equity stake in five to 10 years, how appealing would this be? It is a potentially lucrative outcome which may find favour with financially sophisticated Davy employees. 

And it is likely that the successful buyer will be one that has managed to get shareholder employees on board. Bank of Ireland will have fewer sweeteners to offer.

It’s easy to see the appeal of Davy for Bank of Ireland. Like AIB, it can see the value of a fee-based business. As deputy governor of the Central Bank Ed Sibley said in these pages last week, it is understandable that banks are looking at new sources of income, given the low interest rate environment and higher regulation, to name just some of the issues.

But would it really be positive for the Irish business environment to have our two biggest broking and corporate finance firms owned by the two pillar banks?

Davy’s recent scandal exemplified what goes wrong when greed and power goes astray. There are many, many business people who have a horror story to tell about Davy, and several of those anecdotes were resurrected earlier this year. But there are also several business people who can testify to the fact that Davy dared to think big for Ireland back in the 1980s, playing a key role in pulling off deals which put this country on a global stage in financial terms.

That has all soured now. But perhaps new ownership and a humbler Davy, partly controlled by a new generation of employees and backed by private equity, might ensure that a firm with ambition, an appetite for risk and an entrepreneurial spark would serve Ireland better than another bank-owned entity. 

 

How the pandemic has changed work has been a favoured topic to ponder over the past year or so. And while remote working has dominated the discussion, it may make us value other things. As the Sunday Independent/Statista Best Employers in Ireland report shows, the bells and whistles of tech giants aren’t for everyone. Semi-states have featured strongly – it is very possible that job security may carry a premium in the new normal.