LAST UPDATE | 8 Mar 2021

THE NATIONAL TREASURY Management Agency (NTMA) has said it has withdrawn the authority of firm Davy to act as the primary dealer in Irish government bonds with immediate effect.

The NTMA said that Davy’s position as a dealer of government bonds was “potentially damaging” to Ireland’s reputation amid a growing scandal. 

Last week, the Central Bank levied a fine of €4.1 million against the company after a probe found four breaches of market rules by Davy between 2014 and 2016 in relation to a bond transaction.

The scandal has led to fierce criticism of the firm, and its CEO resigned at the weekend.

Minister for Finance Paschal Donohoe referred to the matter as an “exceptionally serious” issue, while Minister for Public Expenditure and Reform Michael McGrath called it an unacceptable breach of trust. 

Writing in TheJournal.ie, Sinn Féin’s finance spokesperson Pearse Doherty urged the government to cut all ties with Davy unless individuals were held to account.

In its statement today, the NTMA said it has made its decision on foot of the “very serious findings” against Davy last week and after “engagement with investors in Irish government debt over recent days”. 

It said: “A primary concern for the NTMA is to maintain the reputation of Ireland as a sovereign issuer in the bond market and the orderly functioning of the market for Irish Government debt. 

“In this context, the NTMA believes that the behaviour described in the Central Bank findings falls substantially short of the standards expected from market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as a sovereign issuer.”

Minister Donohoe, in a statement this evening., said he felt the NTMA’s decision was “appropriate”.

He said: ‘I note and support the decision taken today by the Board of the NTMA. This is the appropriate decision given the recent very serious findings of the Central Bank.”