Davy has hired financial markets veteran Jim Ryan to go about rebuilding a bond desk from scratch after the stockbroking group shut down this part of its business 19 months ago in the wake of a Central Bank fine.
However, there are no plans for Davy to seek to become a primary dealer in Government bonds again after the National Treasury Management Agency effectively fired the firm from this line of activity early last year, according to sources. Primary dealers are allowed to buy and sell debt securities on behalf of a state.
“Davy is very pleased that Jim Ryan has joined its capital markets team. He brings an enormous depth of experience across investment banking, fixed income and advisory services for over three decades,” a spokesman for Davy said.
“Davy currently provides fixed-income services to its private clients and it has always viewed fixed income as a key component of a broad-based capital markets offering.”
Davy’s authorisation as a primary dealer was withdrawn in March 2021 after the firm received a Central Bank fine and rebuke over a breach of market rules in a 2014 bond deal involving junior Anglo Irish Bank bonds. This prompted Davy to close its entire bond desk.
While Davy’s sudden move to close its bond desk came as a surprise at the time as the firm sought to draw a line under the crisis, sources elsewhere in the industry said it was inevitable the brokerage, since taken over by Bank of Ireland, would seek to re-enter the fixed-income business at some stage.
Mr Ryan co-founded bond trading firm Glas Securities in 2009 with Fergal O’Leary and Michael Cummins to trade Irish Government bonds at a time of frenetic trading of the State’s debt during the financial crisis.
At its peak, Glas was responsible for close to 30 per cent of Government bond trading in the Irish market, but was not a primary dealer.
The Glas directors decided to close the business in early 2014 following a sharp contraction in Irish bonds trading in the secondary markets after the Republic exited a bailout programme.
The market interest rates — or yields — on bonds have risen sharply in recent months as central banks have set off on a cycle of hiking interest rates to rein in inflation.
The yield on the benchmark Irish 10-year Government bonds have jumped to 2.7 per cent as of Friday, from 0.31 per cent at the start of the year.
Bank of Ireland closed its purchase of Davy in June in a €427 million deal that excluded the firm’s former fund management and exchange-traded fund joint venture, which were sold separately.
Meanwhile, Goodbody Stockbrokers, which was taken over by AIB last year, is advancing a plan to become a primary dealer in Irish Government bonds.
An initial assessment by Goodbody for AIB early last year concluded it was important the brokerage become a primary dealer in order to develop a credible bond, or fixed-income, offering for companies.
