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Former Davy executives to net $211.60 million from sale

written by Bella Palmer
bank-of-ireland

Bank of Ireland confirmed on Thursday that it has agreed to buy Davy’s main business, comprising its capital markets and wealth management units, for up to $517.44 million

Five former top Davy executives, who were involved in a controversial bond trade that led to a Central Bank fine in March, are set to net €180 million ($211.60 million) from the sale of the firm’s assets.

Bank of Ireland confirmed on Thursday that it has agreed to buy Davy’s main business, comprising its capital markets and wealth management units, for up to €440 million ($517.44 million). A quarter of the amount is being held back for two years.

Davy has also signed up to sell its funds division and a stake in a UK joint venture in two separate transactions that will boost its excess cash level to about €125 million ($147.00 million). As these are due to be completed before the Bank of Ireland deal next year, the bank will also acquire the cash pile.

Davy put itself on the market in March as it grappled with the fallout from a €4.1 million ($4.82 million) Central Bank fine. Davy was found to be in breach of market rules for failing to identify whether a conflict of interest existed as 16 employees, including the five senior executives, bought bonds from a client in 2014 without disclosing that they were the buyers. Davy also kept its own compliance officials in the dark on the trade.

Brian McKiernan, Davy’s former chief executive, who quit in March, has told shareholders in a holding company that ultimately owns the business that they stand to share as much as €540 million ($635.04 million) net proceeds from the asset sales.

As the largest shareholder, with a 13 per cent stake, he is set to receive €70.2 million ($82.56 million). Four other former senior figures involved in the 2014 trade – one-time chief executive Tony Garry, former deputy chairman Kyran McLaughlin, erstwhile head of institutional equities David Smith and ex-head of bonds Barry Nangle – are poised to share €108 million ($127.01 million) for their estimated combined 20 per cent stake.

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