AT LEAST two sovereign wealth funds from the Middle East may become investors in Bank of Ireland and possibly a merged group comprising Bank of Ireland and Irish Life Permanent through a private investment consortium that is eyeing up the two banks.
The Mallabraca consortium, which comprises US private equity firms JC Flowers and the Carlyle Group, includes state-controlled cash investment funds from the Middle East. The investors are weighing up how the shareholding will be divided among them.
However, informed sources pointed out that the US private equity firms in the multibillion-euro consortium had sufficient funds to buy stakes in one or possibly two of the guaranteed banks.
It is understood former taoiseach Bertie Ahern has been contacted for advice by a number of parties including investment manager Nick Corcoran, one of the businessmen who put the Mallabraca consortium together. Mr Corcoran was raised in Drumcondra in Mr Ahern's constituency.Whilst it is understood that Mr Ahern made a telephone call to the Department of Finance to introduce Mr Corcoran, sources close to the former taoiseach last night insisted he was not involved in any way in the consortium, or acting as an adviser to the group.
Fine Gael leader Enda Kenny warned last night that US venture capitalists should not be allowed to get control of one or more of the Irish banks. His comments echoed concerns expressed by Labour Party finance spokeswoman Joan Burton and Jack O'Connor, president of the State's largest union Siptu.
"The nightmare scenario is that - as with the Eircom fiasco - this Government hands one or more of our major banks over to some US private venture capitalist, whose only interest will be in making a quick buck," Mr Kenny said. Addressing his party's national conference in Wexford, Mr Kenny said this would involve cost-cutting and asset-stripping, the loss of thousands of bank jobs and no risk-taking in lending to businesses.
Mr Kenny also told TV3's The Political Partythat "heads should roll" at the highest level of Irish banking. Asked if senior figures, such as chairmen, chief executives etc, should be sacked if the Government moved to recapitalise banks, Mr Kenny said "I think heads should roll, yes,"
Bank of Ireland said that it had received "unsolicited approaches" from bidders looking to buy stakesbut it had made "no decision".
Meetings are believed to have been scheduled between the bank and the private equity consortium.
The Government and the financial regulator are understood to have encouraged the talks between the parties.
As speculation grew about potential mergers in the banking sector, Irish Life Permanent said that it was in talks with EBS building society about how the two companies "might work together".It has also emerged that EBS is in talks with Dutch giant Rabobank about a potential takeover.