Friday 22 June 2018

AIB in the running to buy Investec's Irish arm

Investec head Stephen Koseff
Investec head Stephen Koseff
Donal O'Donovan

Donal O'Donovan

Investec is understood to be exploring a sale of its Irish arm with AIB a potential buyer, the Irish Independent has learned.

The sale is understood to be prompted in part by Brexit, because the Irish specialist bank has been operated as a subsidiary of Investec's bigger UK arm, a structure that may not have been sustainable under a hard Brexit.

Investec and AIB declined to comment. However, the Irish Independent has established that a sale process is under way, with a number of interested parties including State-controlled AIB.

Investec has been in the Irish market since 2000, but gained significant scale when it took over the former NCB Stockbrokers in 2012 for €32m.

The decision to sell comes just over 14 months after the global head of South Africa's Investec, Stephen Koseff, had said the Irish arm would look to make acquisitions of its own in order to build scale here.

A widely speculated takeover by Investec of Fexco's Goodbody Stockbrokers came to nothing last year.

Investec Ireland is led by long-time chief executive Michael Cullen and is involved in private banking, capital markets and investment banking.

While its parent has invested in Irish mortgages, the brand never entered the retail market in this country.

For AIB a bid for Investec marks a return to the stockbroking sector it was forced to exit in 2011 in the midst of the economic crash.

AIB sold Goodbody Stockbrokers to a combination of the firm's management and Kerry-based Fexco for €24m.

One question staff at Investec must now assess is whether a sale to AIB would bring them under the terms of the State's banking pay cap.

Under those rules staff can earn up to a maximum of €500,000.

In September, Bank of Ireland sold its corporate finance arm, IBI Corporate Finance, to management for €10m, in a deal.

Last year, senior figures at Cantor Fitzgerald and Merrion Capital said high-level talks did not mean a deal was imminent, but consolidation, including to cope with rising regulatory costs, is now in full swing.

Irish Independent

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