Bank of Ireland has made an early approach over the possibility of buying Davy, if the under fire stockbroking firm decides to look for a buyer in the wake of a Central Bank fine over market-rule breaches.
Sources told The Irish Times that the approach was made at a high level and that it has been viewed as laying down an early marker.
Davy’s interim chief executive, Bernard Byrne, is grappling with the fallout of a number of major departures as he attempts to stabilise the business.
Spokesmen for Bank of Ireland and Davy, which was valued at around €400 million before the controversy, declined to comment.
"Day of reckoning."
Speaking at the Oireachtas finance committee on Tuesday, Central Bank director of finance conduct Derville Rowland said the regulator's investigation into the 2014 bond deal at the centre of the Davy scandal led to a “day of reckoning” for the stockbroking firm.
She also said the investigation found no evidence of suspected criminal activity which would have obliged the Central Bank to make reports to An Garda Síochána or the Office of the Director of Corporate Enforcement.
“I can confirm that in the course of this very meticulous and careful investigation we did not form suspicion to support reports to other agencies,” said Ms Roland.
The investigation that 16 staff, including top Davy executives, plotted to make a profit by taking the other side of a bond deal the firm was advising a client on. This was done without telling him or the firm's compliance team.
Bank of Ireland's move is seen as an opportunistic approach.
Davy closed its bond desk on Monday after the National Treasury Management Agency pulled its authorisation as a primary dealer in Government bonds.
A number of other companies are understood to be monitoring the situation at Davy.
Industry experts told The Irish Times that while there may be other interested parties, Bank of Ireland would be seen as the most logical buyer, with its large balance sheet and significant Irish business.
Bank of Ireland previously owned Davy before the broker's management bought it out in 2006, in a deal valued at about €350 million.
Last week, rival bank AIB confirmed that it had agreed to buy back Goodbody Stockbrokers.
AIB was forced to sell the firm a decade ago as it restructured following the taxpayer bailout.