Bank of Ireland is lining up senior group executive Gavin Kelly to lead its Davy stockbroking and wealth management unit, according to sources.
It is understood Mr Kelly, currently chief executive of the bank’s corporate and commercial banking team, is going through a standard vetting procedure – known as a fitness and probity assessment – with the Central Bank.
Bernard Byrne, who stepped up in 2021 to take charge of the business and oversee its sale to Bank of Ireland in the wake of a Central Bank fine, said in November that he planned to leave the firm this year. He joined Davy as head of its capital markets division in May 2019, having previously served as chief executive of AIB.
Spokesmen for Bank of Ireland and Davy each declined to comment on Mr Kelly’s selection.
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“The process is progressing well, and [an] appointment is expected to be announced and to commence during the second half of 2024,” the Davy spokesman said.
Sources said last month that the next head of Davy will become a member of its executive committee and have the head of its life assurance business, New Ireland, report to them under a structure that will make the firm central to its wealth business. Mr Kelly is already on the key committee, but his current role will have to be backfilled.
The appointment of a senior Bank of Ireland figure underscores how it wants to have much greater control over the business than the period between 1988 and 2006 when it previously held a majority stake in Davy, but the firm enjoyed a high degree of autonomy.
Bank of Ireland chief executive Myles O’Grady highlighted to shareholders at the company’s annual general meeting last month that its wealth and insurance assets, including Davy and New Ireland, increased by 18 per cent to €46 billion last year and that he sees “scope for further growth in the years ahead supported by Ireland’s favourable demographics”.
Davy’s key wealth unit’s assets under management stood at about €16 billion by the time it was put up for sale. It had increased to close to €22 billion by the end of last year, including about €2 billion transferred from Bank of Ireland in early 2023 as about 2,000 high net-worth clients moved across.
Davy’s higher-profile capital markets unit has been under pressure in recent times amid a number of large corporate exits from the Irish market and slump in deals activity. The firm has about 900 employees.
Bank of Ireland is currently in two legal disputes with Ailmount Limited, the previous holding company over Davy which is owned by about 700 former and current shareholders in the firm, over certain payments relating to the 2022 sale.
The bank is threatening to withhold about €15 million in cover related to historical legal claims against Davy, and filed proceedings against Ailmount Limited last month.
Last year, Ailmount initiated proceedings against Bank of Ireland claiming the bank had failed to make a payment of about €20 million due as part of the acquisition.
[ Bank of Ireland files court proceedings against former Davy shareholders’ companyOpens in new window ]
That case is currently in the midst of lengthy discovery applications. In February, Bank of Ireland was ordered to disclose more information related to the sale.
Davy had been put on the market in March 2021 after the State’s largest stockbroking firm was convulsed by a €4.1 million Central Bank fine over a bond deal from 2014.
The regulator reprimanded it for breaching market rules by failing to identify whether a conflict of interest existed as 16 staff bought junior bonds in Anglo Irish Bank, in liquidation at the time, from a client, Northern Ireland developer Patrick Kearney, without disclosing that they were the buyers. It also found that Davy had kept its own compliance officials in the dark on the deal.
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