Times is tough it seems for the boys in the pin-striped suits. Dublin’s stockbrokers aren’t sure where their next bottle of Dom Perignon is coming from these days. A flurry of legal actions over corporate deals gone wrong could see the biggest ever consolidation in the sector in Ireland.
According to the main business news analysis piece in The Sunday Times, “strict new rules and a raging hangover from the boom” means straitened times for the sector. The salad days of bumper paydays earned through commissions on a seemingly endless conveyer-belt of corporate deals are well and truly over. The only certainty in these parlous times is that Davy, the leading stockbroker in Ireland, “will emerge from the crisis in an unassailable position ahead of its rivals”, the article says.
Davy is believed to have more than €100m in cash reserves and its bond desk is thriving, thanks ironically to increased issues of government debt.
It’s just as well the government is putting some business the way of brokers because commissions have all but disappeared in equities as the market has gone south over the past few years. In 2007, the value of Irish companies listed on the ISEQ peaked at more than €125 billion. On Friday, it was €45 billion.
The piece estimates that given a 50% fall on the value of institutional trades together with the drop in activity, commissions are down by more than 75%.
However, given that during the boom an average young trader could expect to make more than €100,000 and many were earning well over double that figure, they probably have enough stashed for a rainy day.
Its’ not exactly case of buddy, can you spare a dime?