Philip Lane, governor at the Central Bank of Ireland. Photo: Getty
Ireland is processing over 100 Brexit-related applications from financial services firms, the governor of the country’s central bank told a parliamentary committee on Thursday.
Governor Philip Lane said that the list of applicants includes investment firms, trading venues, electronic money institutions, and commercial and retail insurance firms.
“These are partly new legal entities and existing entities seeking to extend their current authorisation,” Lane said.
These firms are among the many hoping to minimise Brexit-related disruption by moving some of their activities to European Union hubs.
But Lane noted that the bank, which serves as Ireland’s financial regulator, was much more focused on “financial stability” than on the “relative attractiveness of Ireland” compared to other EU countries.
He said that the Irish Central Bank was engaging with its EU counterparts and maintaining the bloc’s supervision standards to prevent “regulatory arbitrage” being a reason for firms to choose Ireland over other jurisdictions.
Despite the boost to Ireland’s economy from these moves, Brexit “will clearly be a negative for the Irish economy and the Irish financial system,” Lane said. Even before the UK leaves the EU in March, he said, Ireland could be affected by financial speculation and sterling currency swings as the likelihood of a no-deal Brexit increases.
While London is still expected to remain the largest financial centre in Europe, the industry has warned of a small exodus of firms looking to cement their post-Brexit futures.
By late June, more than a third of 222 large financial services firms tracked by accounting giant EY had said that they were either considering or had decided to move some operations or staff from the UK to elsewhere in Europe. More than 50 said they had already confirmed the post-Brexit location.
Lloyd’s of London and Bank of America are two banks that will move their EU headquarters to Dublin, while Barclay’s will soon transfer the ownership of its European assets to its Dublin base, where it will employ an extra 200 employees. JP Morgan will also double its headcount in Dublin to 1,000 employees, following the purchase of a landmark office building in Dublin.
Meanwhile, HSBC, the largest bank in Britain, is due to move 1,000 employees to its new EU headquarters in Paris.
Among the concerns of UK-based banks is the post-Brexit ability of the UK to serve as a clearing house for euro assets. As much as £26tn worth of derivatives contracts could be negatively affected by Brexit, according to the UK’s Financial Conduct Authority (FCA).
The FCA has called for cooperation between UK and EU regulators to ensure there will be minimal disruption.