Sunday 21 January 2018

Murphy rings death knell for building societies

Laura Noonan

Laura Noonan

HE'S a diplomatic sort, is EBS chief executive Fergus Murphy -- but even he couldn't gild the lily when asked about the state of Ireland's once-vaulted building society movement.

Faced with a question on whether the movement was "pretty much dead" in light of recent events at EBS and fellow building society Irish Nationwide, Murphy's reply was searingly honest: "Yes".

"Let's be realistic," he implored the assembled journalists. "Given that there are two building societies in Ireland and they're both in state control, it's fair to say that the model is in decline."

EBS is within three months of being sold to either Irish Life & Permanent or one or three private equity groups, with the field expected to be whittled down to one or two over the "next month".

Murphy was the epitome of coy when asked to venture his thoughts on which of the bidders would be best.

"For each positive point on one side there would seem to be to be a corresponding point on the other," he said, weighing the merits of international private equity versus home-grown consolidation via Irish Life."

To muddy the water even further, Murphy said there was an outside chance the institution wouldn't be sold at all, since the "world has been a very strange place lately" and it was difficult to definitively predict a sale.

One thing is crystal clear though -- having spent much of its life espousing mutuality as a point of difference that made it a better place to save and borrow than a bank, EBS is facing a radically new dawn. The reasonable-sounding prospect of that imminent change in ownership, triggering a change in EBS's ethos and positioning, is one Murphy seems particularly keen to downplay.

"We won't have the backdrop of mutuality to talk about ... but I'd be surprised if our ethos changed," he said yesterday, stressing that EBS will "continue in every way we can" to represent its current "culture and ethos".

The reality, though, is that private equity owners in particular could reasonably be expected to have radically different demands and priorities to EBS's mutual members. Asked whether private equity ownership would bring "greater instability", Murphy tossed the question to his finance director, Emer Finnan, who said while private equity investors would be "looking for an exit" the time-frame of that exit would be "extended" in the case of EBS.

"The private equity investors will have to have a business to sell," Finnan said, arguing that it would be in their interests to continue to develop the institution. Murphy is hoping to be on hand to help them with the task too. "I'd like to think I'd have a job in either scenario," he said, stressing that his future role would be "completely up to the new shareholders".

If it doesn't' work out, he could surely offer his services to the UN.

Irish Independent

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