Lender ISTC will part ways with Collins Stewart
Published 14/05/2010 | 05:00
ISTC, THE Irish specialist lender which lost €820m amid the financial crisis, will no longer form part of Collins Stewart, the broker and wealth manager that bought the company two years ago for €5m.
It is understood Collins no longer regards the company as core to its operations and ISTC founder Tiarnan O'Mahoney and a group of other staff now intend to re-establish the company as an independent entity.
Collins is not likely to recover all the €5m invested in the company, but is hoping to recover a large portion of it. The financial contribution, if any, of ISTC to Collins Stewart is not known, but the Collins Stewart investment was always speculative in some respects.
Neither side was prepared to comment yesterday.
ISTC sources capital for European banks and has virtually no business in Ireland. It is believed to have about seven staff, including O'Mahoney, who was a former senior executive at Anglo Irish Bank. The decision does not impact in any way on Collins Stewart's equity broking activities in Ireland.
The company involved is called Collins Stewart ISTC Plc, with Collins Stewart holding 84pc of the equity, according to the company's last annual report. It was purchased in 2008 after ISTC found itself in examinership.
ISTC, known as International Securities Trading Corporation (ISTC), was forced to seek court protection from its own creditors when the US subprime crisis began to takes its toll on financial markets.
The last set of accounts filed by the company, covering 2008, show a loss of €160m, on interest income of €145.5m. The company, at that point, was carrying forward losses of €308.5m available to offset against future profits.
Investors in the original ISTC were a who's who of Irish business, with many of them losing large sums. ISTC, for example, raised €165m in equity when it was founded in 2005, with backers believed to include a large number of Ireland's property developers.
The company first hit a problem in 2007 when it warned that the global credit crisis would force it to take a €70m-plus writedown, triggering a chain of events that left it fighting for its survival.
It was forced to petition for examinership after a warning from Dresdner Bank, a German creditor, that it would seek to have the company wound up unless it paid back a debt of €176,000.