Ireland central bank gears up for influx of UK firms

London financial firms are waiting with bated breath, particularly after the Prime Minister Theresa May’s speech last week, to discover whether the UK can, eventually, hold on to the passporting rights that allow them to trade freely across the EU.  

Andy jalil –
andyjalil@aol.com –

With the probability that Britain could be moving towards a ‘hard Brexit’, many UK firms keen on maintaining their EU involvement have been looking at Ireland for their operations.
In view of that, the central bank in Ireland, in preparation, has begun laying the groundwork to accommodate a significant number of London-based financial services companies in Dublin.
The Central Bank’s Director of Policy and Risk, Gerry Cross, said it was poised to help businesses “think constructively” about relocation, and would take a practical approach as firms look to get their business models approved and their companies authorised.
Cross said the bank had seen “inquires and interest” from a significant number of firms. “These firms are of many different types and cover a wide range of activities,” he said.
“We recognise the practical constraints that firms are facing. Particularly around some of the timing issues, for example setting up business in Ireland, getting authorisation and thinking about model approval. We have no objection to thinking constructively with firms about how this sequencing challenge might be addressed, without undermining our commitment to our responsibilities,” he added.
London financial firms are waiting with bated breath, particularly after the Prime Minister Theresa May’s speech last week, to discover whether the UK can, eventually, hold on to the passporting rights that allow them to trade freely across the EU.
That does look unlikely but of course all depends on negotiations after Article 50 in invoked.
Earlier in the month, the Industrial Development Agency (IDA) had said more than 100 companies, many based in the financial district (City) of London, had inquired about relocating to Ireland after Brexit.
“There is also the important question of group-wide models and how they might operate. This can be a very complex question with many aspects including questions of supervisory reliance,” Cross said.
“The Central Bank of Ireland’s good and long-standing relationship with UK and other authorities means that we will be in a good position to work through these aspects effectively and efficiently,” he added.
The Central Bank is bolstering staff numbers in its insurance directorate by more than a quarter as it looks to welcome insurers from the UK.
The insurance sector in the UK welcomed the Prime Minister’s Brexit speech as “a step in the right direction” but warned confidence among firms was at its lowest level since 2011.
Theresa May’s proposals of a “phased implementation” were welcomed by the Chartered Insurance Institute (CII), which believed it would lead to a greater degree of certainty over a new UK-EU partnership.
May’s speech coincided with new research by the CII indicating insurers’ economic optimism had plummeted over the last 12 months. Almost half (45 per cent) of CII members polled felt the insurance sector would not be well represented in Brexit negotiations and the institute said the research represented a “significant change in confidence.”
But the managing director of engagement at CII said the Prime Minister’s speech gave room for optimism. However, a poll by the CII of its 3,711 members revealed 48 per cent of those polled expected the UK economy to deteriorate over the next 12 months. The Central Bank has moved to deny reports that the country was discouraging firms wanting to move investment banking or trading operations to Dublin because of regularity concerns.
In a speech earlier this month, Cyril Roux, the Central Bank’s deputy governor, said: “We have not sought to dissuade any such entities from seeking authorisation, nor are we planning to do so.”
The Central Bank has made clear that it does not want firms setting up small operations in Ireland just so they can access EU passporting rights. Cross said firms must demonstrate they had “proper business models, with convincing risk identification and management, suitable products, sound finances, and strong boards and executives before gaining approval in Ireland.”