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Stockbroker Davy has said that none of the people involved in a 2014 transaction that resulted in a € 4.1 million fine from the Central Bank already works at the company.
A decision by the company to close its bail bond desk with immediate effect follows, resulting in four layoffs.
In a statement, the firm said the decision follows a Central Bank investigation of a 2014 bond transaction and the decision by the National Treasury Management Agency to withdraw Davy’s authority to act as the primary distributor of government bonds. Irish.
On Saturday, three senior officials at the stockbroker, including its chief executive officer and vice president, resigned after the company was punished with a fine of 4.1 million euros for breaching regulations during a bond transaction in 2014. .
Earlier today, the NTMA said its board had made a decision on Davy based on its “assessment of the very serious findings” related to the firm that were made by the central bank last week.
In a statement, the NTMA said the decision was made after engagement with investors in Irish government debt in recent days.
“One of the main concerns of the NTMA is to maintain Ireland’s reputation as a sovereign issuer in the bond market and the orderly functioning of the Irish government debt market,” he said.
“In this context, the NTMA believes that the behavior described in the Central Bank’s findings is substantially below the standards expected of market counterparties, peers and colleagues in the bond market and is potentially damaging to Ireland’s reputation as sovereign issuer “.
It comes as the NTMA said it plans to raise between 1 and 500 million euros of debt on Thursday by selling 10- and 29-year Treasuries.
Finance Minister Paschal Donohoe said he supports the NTMA board’s decision to withdraw Davy’s authority to act as the main dealer of Irish government bonds.
In a statement, Minister Donohoe said the decision means that Davy Stockbrokers is no longer part of the main dealer network for the sale of government bonds.
“This is the appropriate decision given the recent and serious findings of the Central Bank,” he added.
Finance Department Minister of State Seán Fleming described the NTMA’s decision as a “common sense decision.”
“It is clear that it would have been detrimental to Ireland’s reputation to enter a bond sale next week, having had one of our main major distributors involved in such a scandal,” Minister Fleming said on RTÉ’s Drivetime.
He added that the Government did not give instructions to the NTMA in this regard.
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Sinn Féin finance spokesman Pearse Doherty has said the NTMA had no choice but to sever all ties with Davy given the significance of the abuse that took place at the company and the harsh findings of the Central Bank.
Speaking on RTÉ’s Six One News, he said he was disappointed that the government had not asked for ties with the company to be severed.
He said that this is an important issue and that the message must be spread that this type of conduct will not be tolerated and that no protection will be provided to the reputation of companies that engage in this type of activity.
Mr Doherty said the question will now arise in relation to the roles of Permentant TSB or the Bank of Ireland, companies in which the State has a significant stake.
Davy’s new interim CEO Bernard Byrne addressed company staff this morning.
It is understood that in his speech, Mr. Byrne acknowledged that Davy’s board of directors understands that there were failures and that he promised to act urgently and do the right things, subject to observance of due process.
Sources indicated that there was a tone of humility in what Byrne said and an acknowledgment that Davy “was wrong.”
It is understood that the address was well received by Davy’s staff and that it had an appropriate tone.
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