Calls for top-secret report on brokers to be released
Published 05/01/2013 | 05:00
THE Central Bank is facing calls to publish a confidential report showing major problems with the stockbroking industry.
The top-secret report by the regulators warns there will have to be mergers of firms to ensure the industry survives, as part of a major revamp.
The report also says this process will have to be done in a controlled way – because any instability in the sector could pose a danger to many people's savings, and prevent new businesses from raising money at a time when banks are not lending.
He said it was essential investors had confidence that their money was being handled properly.
"It is deeply worrying that the Central Bank has found problems with the stockbroking industry. We need this report published," he said.
And there was a need for follow-up action by the regulators to ensure the highest standards operated across the stockbroking sector, he said.
"The stockbroking industry cannot afford further reputational damage, given the collapse of Bloxhams last year," Mr McGrath said.
The report follows an unprecedented investigation by the financial watchdog into the industry, which uncovered numerous problems.
A senior source told the Irish Independent that the sector was under pressure and the Central Bank believed further mergers would be necessary.
The Central Bank is anxious to ensure that the consolidation occurs in a "sensible manner" and that firms are not incentivised to take undue risks to maintain unrealistic business levels.
"The regulator is looking very closely at the position of the remaining firms, with very close monitoring and engagement. The Central Bank is also looking at the adequacy of client asset controls to make sure that client funds are properly protected," the source said.
The regulator will be taking a tough position on any problems with how assets are controlled, and will be concluding a review on client assets early this year.
The country's oldest stockbrokers, Bloxham, went bust last year. Davy stockbrokers bought some of Bloxham during a weekend deal, but other parts were not sold.
There has been a huge shakeout in the industry, with 16 domestic stockbroking firms in 1988 compared with just six today.