IRISH Bank Resolution Corporation has abandoned a multi-million euro deal to outsource parts of its former wealth management business and will now "wind down" the unit over five years instead.
In a surprise announcement yesterday, IBRC (formerly Anglo Irish Bank) said the decision had been taken because the proposed arrangements with Key Capital would "not deliver the best outcome for all stakeholders".
The news means the 40-plus staff at Wealth Management are likely to lose their jobs over the coming years. A spokesman for the bank said a "consultation" with staff would begin, but stressed that there would be no "imminent" job cuts.
Under the mooted deal with Key Capital, more than 30 staff would have transferred to Key Capital under their existing conditions and would have had long-term jobs there.
Sources close to the process blamed the "complexities" of transferring staff and €500m of assets for the decision not to proceed with the deal. IBRC had spent more than a year working on ways to dispose of the wealth management business.
The bank is also proposing to outsource as many as 250 of its other staff in areas like IT, human resources, facilities and back office operations. An IBRC spokesman yesterday said the failure to pursue the Key Capital deal would have "no" implications for the other outsourcing projects.
IBRC entered a period of "exclusive" negotiations with Key Capital in early February, weeks after the bank announced that it would not be proceeding with the full-on sale of the wealth management division which Key had bid for.
The outsourcing arrangement would have seen Key Capital pay an initial consideration to IBRC and then receiving a servicing fee from the bank for a number of years.
The sums involved were "multi-million", the Irish Independent understands, though failure to do a deal won't materially impact on IBRC's finances. The deal was subject to approval from the Central Bank, but it is understood that regulators had not raised any objections.
In yesterday's statement, IBRC said it will now pursue an "orderly" wind-down of the wealth management business "over a five-year time-frame". No new business will be written, and funds will be returned to clients when they mature.
The vast majority, if not all, of the wealth management funds are set to mature within the five-year timeframe. IBRC said wealth management clients would be "notified in due course of any changes which may impact them or their investments".
IBRC executive Tom Hunerson, who has led much of the wealth management process, said the bank "appreciates Key Capital's full commitment to this process and welcomes the opportunity to work with Key Capital again in the future".