AIB confirms €138m deal to buy Goodbody

AIB confirmed on Tuesday that it had agreed to acquire Goodbody Stockbrokers for €138 million in a deal that would protect bonuses for staff of the securities firm.

The deal, which remains subject to regulatory approval, would also see 30 AIB corporate finance and wealth management staff transfer to Goodbody Stockbrokers by the end of next year and benefit from the brokerage’s variable pay policy.

Minister for Finance Paschal Donohoe said the staff transfers were necessary for AIB and Goodbody to generate "significant synergies". However, he said that safeguards are being built into the transaction to ensure that it does not otherwise become a way of getting around bonus restrictions that apply to AIB and other bailed-out banks.

Mr Donohoe told reporters that, aside from those earmarked for transfer, subject to oversight by an accountancy firm to be hired by the Department of Finance, staff from any other part of AIB who earn at least €50,000 a year will not be allowed to take up employment at Goodbody within two years of leaving their AIB post.

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Goodbody managing director Roy Barrett confirmed in an internal email that he will be stepping down after 25 years at the helm once the deal is completed. He will be replaced on an interim basis by Brian O'Kelly, currently co-head of investment banking at the firm, until a permanent candidate is selected.

“The acquisition of Goodbody will greatly increase the group’s capacity to broaden its services to customers, while also enhancing the bank’s growth opportunities,” said AIB chief executive Colin Hunt. “This is a landmark deal for the bank, as AIB positions itself for expansion in Ireland, supporting our 2.8 million customers and ready to underpin Ireland’s economic recovery as we emerge from the Covid-19 pandemic.”

AIB, which previously owned Goodbody for 21 years, was forced to sell the firm a decade ago for €24 million as the bank went through a European Union restructuring plan tied to its taxpayer bailout. That deal involved Fexco taking a controlling stake in the business, with management and certain employees, led by Mr Barrett, ultimately left with a 49 per cent interest.

While the value of the current transaction is a multiple of the size of the 2011 deal, sources previously noted that AIB had extracted about €100 million of surplus cash from Goodbody before the sale a decade ago.

Goodbody recorded revenue of about €71 million for last year, AIB said. The deal will add “modestly” to AIB’s earnings in its first full year under the group, it said. Goodbody manages assets of about €8 billion and employs 300 people in offices across Ireland and Britain.

Completion of the acquisition is conditional on the satisfaction of customary conditions including approval by the Central Bank of Ireland and the Competition and Consumer Protection Commission.

While Fexco will receive all of the €70.4 million it is due on completion of the deal, staff will receive an up-front payment of only 60 per cent, with the balance paid over two subsequent years, according to sources.

Goodbody has been the subject of two abortive takeover deals by separate Chinese groups over the past 26 months.