EBS chief plays down prospect of private equity deal with investors
Less burden on the State in event of deal with Cardinal
Published 22/04/2010 | 05:00
EBS chief executive Fergus Murphy said yesterday he expects to have greater clarity within a couple of months regarding a potential private equity investment in the building society by Cardinal Asset Management.
Mr Murphy also said he was keen to play down the ongoing talks, noting that there was no certainty any deal would be done.
Cardinal is headed by Nigel McDermott and Nick Corcoran and had been at the centre of the so-called Mallabraca consortium, which had previously circled Bank of Ireland and Anglo Irish Bank over the past 18 months.
Mr Murphy also confirmed that, were a deal successfully concluded, the amount of money the taxpayer might have to inject into the institution could be substantially reduced from the €875m that is currently envisaged.
EBS has also been in talks with Irish Nationwide Building Society (INBS) for a number of months regarding a potential tie-up.
However, INBS management indicated this week that those talks have been put on ice as it starts to draft an EU state-aid restructuring plan.
This plan must look into three key scenarios -- a complete winddown of INBS, a potential merger, or the possibility of the society standing on its own two feet.
"It's very early stages," said Mr Murphy in relation to the private equity talks.
EBS is now being advised by NCB Corporate Finance and KPMG.
"If this were to work, (the investors) could take a substantial stake," Mr Murphy said, adding that it could "possibly" be a majority holding.
"The soundings are good but the devil is in the detail," he added.
Still, it is understood that the Government is keen to see the potential private equity investors come up with a firm proposal in the very near future.
Mr Murphy said he didn't have a preferred option regarding either a private equity investment or a tie-up with INBS and a subsequent government cash injection.
"I think it's about mending the system. I think EBS can have a strong position in the system going forward as a genuine competitor in a lot of products AIB and Bank of Ireland have -- be that under a sort of government mutual scenario or a private equity scenario."
Mr Murphy also conceded that there would be valid public concerns about private equity outfits becoming involved, but that these could be addressed.
Mr Murphy also said that the percentage of its mortgage book now more than 90 days in arrears has roughly doubled since December last year from 2.8pc to 5.5pc. "I think we're going through the worst of it now, in 2010," Mr Murphy said.
He added that the increase was at the pace EBS had previously predicted, and said he expected the home loans arrears figure to peak at between 7.5pc and 8pc.