AIB to sell outsourcing arm for €33m

AIB HAS agreed to sell its outsourcing operation, AIB International Financial Services (AIB IFS), to UK business outsourcing group Capita for £29 million (€33.1 million).

According to a spokesman for AIB, given the division’s focus on the international market the divestment was in line with the bank’s strategy of disposing of non-core activities and concentrating on the domestic market.

AIB IFS employs 160 people – 100 in its operations in the IFSC, and 60 internationally – and provides outsourced services such as corporate administration, treasury management, securitisation, aviation leasing and middle and back office services to financial institutions and corporate clients.

It was one of the first companies to set up as part of the IFSC regime in 1988, and many companies which would later establish standalone companies in the IFSC first came to Ireland by outsourcing their operations to AIB. In 2010, the business reported an operating profit of £6.2 million (€7.1 million), based on turnover of £24 million (€ 27.4 million).

According to Robbie Hughes, country manager of Capita in Ireland, the firm made known its interest in AIB IFS some time ago. “This is a business we’ve been chasing for quite a while.” He said Capita was “very happy” with the price paid for AIB IFS, which will be rebranded as Capita IFS.

Capita has been in Ireland for about 10 years and employs about 1,000 people across five business lines – share registration, fund administration, life and pensions, asset services and contact centre management services.

For Capita, a company that looks to grow by acquisition, the attractions of AIB IFS included its presence in jurisdictions such as Hungary, Switzerland and Luxembourg; its sales office in the US; and its service offering in areas like treasury and back/middle office.

“As large financial institutions and banks look to reduce costs, outsourcing is seen as a key way of reducing those costs so we think it’s a good time to have that capability,” said Mr Hughes.

Capita will now look to capitalise on its position in these areas, with further acquisitions, both in Ireland and abroad, a possibility.

“Acquisition is normally our entry point into a new service line,” Mr Hughes said, adding that the deal may well be “good news for jobs in an Irish context”.

It is expected that all AIB IFS staff will transfer to Capita as part of the deal, and Mr Hughes stressed that Capita is “not a private equity company”.

“We’re not looking to slash and burn. It’s a long-term hold with great growth opportunities,” he said.

The deal is expected to close, pending regulatory approval, in six weeks.