| From Dublin to Reykjavik - a busy year for Merrion |
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| Adrian O’Carroll looks back on a buoyant year for Merrion, the first as a subsidiary of an Icelandic bank, and assesses the key challenges and opportunities that will face the firm over the coming year. |
Q. From a profitability perspective, how does the year to date compare with previous years?
A. We had a great year last year and as we entered 2006 we were budgeting for a marginally better year off such a high base. Last years profit level was reached at mid-year so it has turned out a good deal better than we expected.
Q. What is driving growth in your business?
A. In institutional equities we are gaining significant market share on the back of the strength of our research. In corporate finance we worked on the two big deals of the year – Aer Lingus and Eircom. In retail we continue to grow very strongly due to the buoyancy of the economy and growing market share.
Q. What are the key challenges facing your business going forward?
A. One of the biggest constraints in Ireland is supply of labour. The growth described above means we need to hire good people in all departments – front office and back office. In a similar way to the trend in Ireland plc a growing proportion of the new recruits are new migrants to Ireland. Its great to be able to welcome talented staff from abroad in the way Irish graduates were welcomed internationally when the economy was less successful. I suspect we will continue to recruit more people overseas given the supply constraints in Ireland – however any interested ambitious, talented and entrepreneurial candidates in Ireland can apply - speak confidentially to Aoife Howe or Martha Hayes on 01 240 4100 or check out our advertisement on the new FINANCE magazine jobs website www.financejobs.ie.
Q. To what extent does your private client division contribute to overall company revenues?
A. The private clients and institutional equities are neck and neck as the two largest divisions.
Q. The Irish financial services sector is currently suffering from a skills shortage – is this also affecting the stock broking industry ? if so, what type of positions are most difficult to fill ?
A. As I referred to above, it is one of the major challenges affecting our business. In addition to the comments on external recruits made above in Merrion we also have a policy of building up a team of people internally with the required skill sets. A lot of our best people are people who joined us at the start of their careers and have grown with the firm. We believe the organisational structure in Merrion is an ideal one for entrepreneurial people to join at an early stage and develop the skill sets to take them to the top of this industry.
Q. What proportion of your broking business do CFDs now represent?
A. On the institutional side hedge funds are a growing proportion of the fund management internationally. Even traditional firms are launching in-house hedge funds more and more. Whether these firms use CFDs or not, they certainly use derivative instruments. Its hard to be exact as to the proportion of business but its large and growing.
On the retail side, CFD’s have provided a huge catalyst to growth in the industry over the last few years. With a sophisticated high net worth client base on the retail side, CFDs have taken a significant proportion of the retail business.
Q. The Association of Investment Trust Companies in the UK recently expressed concern over investors using CFD positions as a way of amassing large stakes in companies - should this issue be examined in Ireland?
A. There hasn’t been any example of abuse of this to date - Ireland tends to be a good deal more transparent. No doubt whatever conclusions are reached in the UK will make their way to Ireland in due course as most of the CFD providers in Ireland are London based.
Q. What buying trends (i.e products/type of companies/ countries) are evident amongst a) institutional investors; b) private clients
A. Our clients come to us for investment advice so the companies that they buy are those companies we recommend. We choose companies on the basis of good management, good track record, good cash flow, good returns on capital, good organic growth outlook and a good valuation – it the companies meet these criteria then other considerations tend to be secondary.
Q. What new products are your firm currently developing?
A. On product innovation our focus is always on helping our clients to achieve out performance. We believe we have achieved this as evidenced by the results since inception in January 2000 of our flagship 10 stock model fund which measures our top research recommendations in a fully accountable way. By January 1st we hope it will have a record of 7 years of out performance. We don’t want to complicate things with too many products - if we can simply achieve this objective of delivering out performance to our clients then we will have achieved a lot. What we do constantly is reexamine how we choose the companies that are in the 10 stock fund to ensure continued out performance.
One thing we are currently working on is a number of innovative ways to distribute our product which we will be rolling out shortly. |
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