Stockbroker NCB is to sell its money-broking business to the division's management for over €1 million.
NCB announced yesterday that it had finalised a deal that would allow employees of the money-broking division to buy it. Pending approval from the Irish Financial Services Regulatory Authority (IFSRA), the firm expects the transaction to close by the end of the year.
Neither side would reveal the sale price yesterday. However, The Irish Times understands that it was over €1 million. The agreement is said to involve an earn-out clause, which means that payment will be made in stages determined by the new entity's earnings.
An eight-man team of managers and dealers will take over the business. They are: Mr Kevin Gahan, Mr Ian McGonigle, Mr Chris O'Shea, Mr Chris Rees, Mr Fergal Cornally, Mr Ciaran Bradley and former employee Mr Les Holmes.
Once it is established and has IFSRA approval, it will trade under the name of IFS Brokers. The current head of the division, Mr Brian Bolger, will remain with NCB. The firm has appointed him head of fixed income.
NCB's money-broking business provided services for Irish banks trading money on the inter-bank market. Its main clients were the Republic's biggest institutions, AIB and Bank of Ireland.
NCB wanted to sell the business as it no longer considered it a core part of its operations. The introduction of the euro at the beginning of 2002 reduced its business, while increased competition has also seen margins and commissions fall.
However, sources yesterday agreed that it was viable as a stand-alone operation, once its new management kept costs under control. "It should still be possible to squeeze a decent margin from it," one source said.
Speaking on behalf of those involved in the buyout, Mr Gahan said they were happy to have concluded a deal that would allow them operate the business as a separate entity.
NCB chief executive Mr Conor O'Kelly said yesterday that the sale of the money-broking business was in the interests of shareholders, clients and staff. "We now believe that its future prospects are best served under the ownership of the existing money-broking team," he said.
NCB will concentrate on its equity, wealth management and corporate finance businesses. NCB is 20 per cent owned by the Mr Seán Quinn-owned Quinn Group, while management own the remaining 80 per cent.
Its management bought it from Ulster Bank last year. Financier Mr Dermot Desmond, who originally founded the company in the early 1980s, backed the buyout by taking the 20 per cent stake that was subsequently sold to Mr Quinn.
