UPDATE 1-Bank of Ireland explores approach for Davy Stockbrokers -reports

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DUBLIN, March 10 (Reuters) - Ireland’s Davy Stockbrokers is set to put itself up for sale as soon as Thursday after Bank of Ireland made an initial approach to buy the firm which is grappling with the fallout from a record central bank fine, local media reported.

Ireland’s largest stockbroker was fined last week after an inquiry into 16 of its staff who the regulator alleged sought to profit in 2014 by taking the opposite side of a bond deal with a client, without telling the client or compliance officials.

Quoting unnamed sources, the Irish Times newspaper said Bank of Ireland had made an “exploratory approach” to Davy. Irish online publication The Currency said a sales process is expected to start on Thursday, citing sources within the broker.

Davy closed its bond desk on Monday after it was dropped as a primary dealer in Irish government bonds and the central bank said on Tuesday that it remained under close regulatory scrutiny following the 4.1 million euros ($4.9 million) fine.

A spokesman for Davy declined to comment on both reports. A spokesman for Bank of Ireland also declined to comment.

The 16 Davy staff members whom the central bank accused of breaching market rules included then chief executive, Brian McKiernan, who quit on Saturday alongside two senior executives.

However Irish government ministers have raised concerns that McKiernan and others involved still retain a large stake in the business. Davy is an independent company wholly owned by management, staff and former employees.

Allied Irish Banks last week bought one of Davy’s main rivals, Goodbody Stockbrokers, a leading Irish provider of wealth management, corporate finance and capital markets services.

Davy is also the country’s largest wealth manager, with around 8.5 billion euros assets under management, and is a corporate broker for some of the largest firms listed on the Irish stock exchange.

Reporting by Padraic Halpin; editing by Louise Heavens and Jason Neely