BANK OF IRELAND has agreed to buy most of Davy Group for €440 million.

The deal will see the lender acquire Davy’s main profit-generating business including its wealth management, capital markets and asset management divisions.

Separately, Luxembourg-based investor services company IQ-EQ has reached an agreement to buy Davy’s Global Fund Management business. 

The acquisitions are expected to be completed in 2022.

The announcement was welcomed by Finance Minister Paschal Donohoe, who said it brings an end to the uncertainty and provides Davy with “a well-capitalised owner providing opportunities for growth, which will support the wider needs of the Irish economy and businesses”.

“This transaction provides Bank of Ireland with growth opportunities as it expands its product range in the high net worth and mass affluent categories,” he said.

“Furthermore, it supports the bank’s stated strategic priority of growing the wealth and insurance business with the aim of unlocking growth opportunities in Ireland, increasing fee income, and generating sustainable profits.”

The minister said the bank sought his consent for the continuation of current remuneration arrangements in Davy, as standard arrangements in stockbroking and wealth management are different to those in a retail and commercial bank. 

“This has been done in a manner consistent with the AIB acquisition of Goodbody and ensures ongoing compliance with government policy on bank remuneration which remains unchanged,” he said.

It comes one month after Donohoe announced plans to sell part of the State’s remaining 14% stake in Bank of Ireland by the end of the year.

Market rules breaches

Commenting on the announcement, Bank of Ireland Chief Executive Francesca McDonagh said this morning that the deal offers value to the bank’s shareholders.

“Wealth management and capital markets are important parts of our business. Bringing Davy into the Group represents a significant milestone, which will considerably enhance our customer offerings and growth outlook for the group.

“We welcome the Davy team and all of Davy’s customers to Bank of Ireland.”

The scandal-hit brokerage was put up for sale earlier this year after the Central Bank of Ireland levied a fine of €4.1 million against the company.

A multi-year probe by the regulatory found four breaches of market rules by Davy between 2014 and 2016 in relation to a transaction involving Anglo Irish Bank bonds.

The scandal led to fierce criticism of the firm, which led to the National Treasury Management Agency removing Davy’s authorisation to act as a primary dealer of Irish government bonds.

Davy chief executive Brian McKiernan resigned in the wake of the scandal as did deputy chairman Kyran McLaughlin and head of bonds Barry Nangle.

- With reporting by Michelle Hennessy.