AIB is set to break up Goodbody stockbrokers by integrating the broker's bond dealing team with the existing AIB Capital Markets operations in the IFSC. This will leave Goodbodys to concentrate on equity dealing and corporate broking, while integrating all AIB group's main Irish pound market-making operations in its lFSC operation.
While a final decision has yet to be taken, AIB management is expected to shortly approve the restructuring of its subsidiary. This would involve moving around 10 bond dealing and economic research staff from Goodbodys to AIB Capital Markets.
Goodbodys is one of six brokers licensed to operate as a market-maker in Irish gilts. Market-making came into force in December, 1995, and involves brokers dealing on their own behalf and committing to always quote a price on a range of bonds. Previously brokers had only dealt on behalf of clients.
Because it is moving its bond dealing operation, Goodbodys will have to apply for a fresh membership of the Stock Exchange as a primary market maker for the new bond-dealing entity. It must also get clearance from the National Treasury Management Agency, which oversees the marketmaking system.
Goodbodys is one of four domestic market-makers, and two foreign brokers also operate as market-makers in Irish gilts. No figures on market share under the market-making system have been published. Market sources believe that Davys and NCB have been the two leading firms in terms of market share, with Riada third and Goodbodys fourth.
The move of Goodbodys bond operation would also integrate all AIB's Irish-pound market making operation under one roof. The bank already has sizeable currency and interest rate desks in it's building in the IFSC.
The move to EU monetary union is another reason behind the expected move of the bond desk. After monetary union the whole structure of the Irish bond market is likely to change with new issues in euros, demanding a new kind of service for institutional clients both in Ireland and overseas.
Providing a final decision is made to switch the bond operation, Goodbody stockbrokers will remain as an equity operation, concentrating on acting for institutional investors and its sizeable private client base. The corporate broking arm - serving the clients for which Goodbody stockbrokers is broker - is also being developed.
Goodbodys has recently hired Mr Liam Booth, previously of the Cambridge Group to work in this area and Mr Kevin Keating has also moved from AIB Corporate Finance to Goodbodys.
AIB bought Goodbody stockbrokers in 1989. The current chief executive is Mr Roy Barrett, who was appointed last year to succeed Mr Peadar O'Shea.
The annual survey by Finance magazine for the year to last March estimated that Goodbodys had a 22.1 per cent market share in the institutional equities market - putting it in third place. Davys was in first place, according to the survey, with NCB just ahead of Goodbodys in second.
