‘Realistic’ Ireland unwilling to host large trading schemes, investment banks told

Ireland has signalled to several large investment banks that it would be reluctant to host large trading operations, banking sources have told Reuters. This is despite Dublin’s desire to attract financial sector jobs from London after Britain leaves the EU.

This reticence, linked to Ireland’s painful experience of the banking crash in 2008 and subsequent international bailout, means Dublin is unlikely to become a major destination for what is regarded as some of the banks’ riskiest business. Ireland’s Central Bank has indicated in talks with the banks that they would face high hurdles to win regulatory approval for such operations, which involve huge sums when compared with the relatively small size of the country’s economy.

“Ireland is being very realistic about what it can and what it wants to do,” said one source at a large global investment bank, speaking on condition of anonymity as the discussions are private. “If you’ve come from all the troubles Ireland has, you want to be very careful about taking on risks.”

The largely US , British and Swiss investment banks are working out how to secure access to the European Union when Britain leaves .

The main question is where to trade and clear European securities and euro, and carry out other market activities controlled by EU regulation. Such trade carries a lot of risk and large balance sheets, meaning regulators must supervise the banks’ trading models closely. This, along with the scale of the business, has prompted the cautious response from Dublin, according to the sources. A spokeswoman for the Central Bank said there was no blanket policy of turning certain types of business away.

“The Central Bank is open to engagement with any firm wishing to obtain an authorisation,” she said.

However, another banking source said Dublin had specific types of financial business in mind.

“Yes, Ireland wants insurers, asset managers, back office functions . . . but they don’t want big balance-sheet risk. They just don’t want to take on that kind of risk and feel that they don’t have the regulatory bandwidth to do that,” the source said.

Reuters asked the five large US banks, as well as Barclays and Credit Suisse, who have some operations in Ireland, whether Dublin was still a contender. All of the banks declined to comment.

– Reuters