Business Irish

Tuesday 25 July 2017

Every consultant seeks an invite to restructuring party

ANALYSIS

IN early February a conference call took place to firm up the final details of the sale of Anglo Irish Bank and Irish Nationwide's deposit books.

It was a routine call between the Department of Finance, the National Treasury Management Agency, the Central Bank and the institutions involved -- yet it attracted no fewer than 18 participants.

"One bank had three separate advisers listening in: a legal adviser, a commercial adviser and another adviser," a source recalls. "We couldn't believe how many people were on."

The call isn't an isolated incident -- as the seismic restructuring of the Irish banking landscape gathered pace, it became the party that every consultancy in the world wanted to be invited to.

And a good number of them were. Over the past year, investment bank Goldman Sachs, UBS, Credit Suisse, BlackRock and Barclays have all trooped over to Dublin, as have specialist financial firms such as Bain and McKinsey.

The presence of so many well-heeled bankers has not gone unnoticed in a city as small and parochial as Dublin, particularly since teams from the troika also beef up the visitor contingent (though ironically the top finance delegates from the EC and ECB are actually Irish).

Hospitality sources refer to the 'golden triangle' of the Merrion, the Shelbourne and the Four Seasons hotels, where many of our visiting experts have been known to stay, giving Dublin the healthiest occupancy rates in the country.

Some of the city's upmarket restaurants are also reportedly doing a healthy trade catering to visiting consultants and hedge-fund types, who come on a bargain hunt.

For the most part, though, the consultants have been low-key -- stories of €1,000 bottles of champagne and similar extravagances are impossible to come by.

Financial sources say it is partly because the visiting bankers are conscious of being "discreet", given the state of the Irish sovereign that's ultimately funding most of their multi-million euro fees.

Value

Others say it's because the consultants are indeed working.

"These guys worked really hard for us," says one Irish banker. "We'd have conference calls at 10am on a Sunday to go through things and everyone was expected to be on."

The value of that job is a matter for debate. Banks insist they got value from their own advisers who helped them with their various capital-raising efforts.

The Government's advisers get more mixed reviews, although sources do credit them with helping the banks to raise some €6bn of this summer's €24bn recapitalisation from private market sources.

One of the issues is that, these days, much of what the Department of Finance does has to be independently verified by advisers -- even though the department now has significant in-house talent and skills.

"If you didn't have it reviewed, you'd get criticism for not having someone independent look at it," said one source. "But you don't always actually need it."

Some of the banks have similar comments about the usefulness of the contributions they get from various advisers acting for the State.

"We spend a lot of our time explaining things to them," said another source. "It's hard to see how that adds value."

Irish Independent

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