Allied Irish Banks (AIB) has reached an agreement to buy back Irish wealth manager Goodbody Stockbrokers in a deal valued at €138m ($166.2m).

AIB, which sold Goodbody a decade ago as part of a state bailout, will acquire the entire share capital of the firm from its current shareholders for an enterprise value of €82m, alongside €56m excess cash on its balance sheet.

The lender said the transaction is modestly accretive to its earnings and ROTE in the first full year of ownership.

Completion of the deal is subject to customary conditions, including approval by the Central Bank of Ireland and the Competition and Consumer Protection Commission.

Deal Rationale

Goodbody, which oversees €8bn in assets, provides wealth management, asset management and investment banking services to both private and corporate clients. It has a workforce of 300 people across its offices in Ireland and the UK.

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The acquisition follows AIB’s strategy to diversify its income streams and addressing the gaps in its overall customer offering by making selective investments.

AIB CEO Colin Hunt said that the deal will considerably increase the company’s capacity to broaden its services to customers, while also enhancing the bank’s growth opportunities.

Hunt added: “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.

“We are focused on achieving the transformation of AIB that we announced in December 2020 and working towards our target RoTE of >8%.”

Goodbody managing director Roy Barrett added: “With AIB, Goodbody is aligning with the market leader and could not be better positioned to compete in the financial services sector over time.

“This is now the beginning of an exciting new phase of the company’s development as this partnership has the potential to offer our business, our clients and our staff many opportunities for growth as we start the next chapter of Goodbody’s history.”

Additional transaction details

As part of the deal, a ‘small number’ of AIB employees from its Corporate Institutional and Business Banking team are anticipated to join Goodbody to rule out duplication.

Goodbody will remain a separately regulated entity with its own brand and board, following the transaction.

AIB said will continue to follow the Irish government’s pay restrictions, with separate remuneration structures in place for Goodbody.