THE GOVERNMENT is seeking investment banking and financial advisers to offer consultation on the banking sector, including restructuring and potential transactions between institutions.
In a tender published over the weekend, the State’s debt manager, the National Treasury Management Agency (NTMA), which, with the Department of Finance, is co-ordinating the State’s support of the banking sector, has advertised for financial advisers to Minister for Finance Brian Lenihan.
It is understood that the tender relates to the contract held by investment bank Merrill Lynch, which has been working with the NTMA on the restructuring of the banking sector since September.
The bank’s contract with the Government expired at the end of last month. The firm was paid a basic retainer fee of €2 million but that could rise as high as €6 million, depending on any transactions undertaken.
The tender states that the range of services sought under the new State contract include, but are not limited to, “advice in dealing with EU Commission requirements”, “general advice on different aspects of the banking system and any potential transactions” and “sectoral restructuring and viability planning”.
The Government will also seek “recommendations on how relationships with participating banks and other stakeholders should be managed on an ongoing basis”.
The advisers will assist both the NTMA and the department in restructuring the banking sector. Interested parties have until Monday to submit tenders or requests to participate.
Merrill Lynch was hired by the NTMA following the collapse of US bank Lehman Brothers, which caused significant stress within the Irish banking system.
The department said in a reply to a Dáil question from Labour TD Joan Burton that Merrill Lynch was retained urgently at the time, after the NTMA contacted a number of banks which declared conflicts and could not be hired.
Merrill Lynch has advised on the bank guarantee, the recapitalisation of the banks and the nationalisation of Anglo Irish Bank.
The Government selected the London-based investment banking unit of HSBC last month to advise on the establishment of the National Asset Management Agency (Nama).
The restructuring of the banking sector is regarded as the fourth part of the State plan to repair the industry following the State guarantee, recapitalisation of the banks (and nationalisation of Anglo Irish), and the removal of toxic assets through the State’s “bad bank” agency, Nama.
John Hurley, the governor of the Central Bank, indicated in a speech last month that the establishment of Nama will pave the way for consolidation and changes within the banking sector.
He said that Nama would be “central” to future changes in the structure and shape of the domestic banking system. “The banks that emerge from that process may well be smaller but better prepared for the new environment,” he said.
