IDA ‘confident’ of Brexit investments pipeline, banking event told

IDA Ireland’s head of international financial services, Kieran Donoghue, has said he is “confident” that the Republic will secure a number of wins as his organisation “aggressively” pursues the opportunity to lure financial activity from London following Brexit.

“I’m confident that there will be a flow of announcements,” Mr Donoghue said at a Federation of International Banks in Ireland conference in Dublin on Thursday, adding that many firms had privately selected Ireland but had to notify their home regulators and other parties before making public announcements.

The agency responsible for foreign direct investment into the State has received close to 100 inquiries from overseas firms considering their options following the UK decision a year ago to leave the European Union.

“We would expect to see some announcements from July to the end of the year,” Mr Donoghue said, noting that the Bank of England had ordered UK firms to advise it of their Brexit contingency plans by the middle of next month.

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His comments came as another conference speaker warned that the Republic should be wary of a “renewed zeal for Europe” inspired by Emmanuel Macron’s election as French president, which may result in a push by the EU for greater fiscal and tax harmonisation.

Cork-native Michael O’Sullivan, the chief investment officer for international wealth management at Credit Suisse, said pro-EU sentiment was “now alive again on the continent”, which may result in fresh efforts to accelerate EU integration.

He said this may be “damaging” for Ireland, whose recovery from the financial crisis had been helped by having a flexible tax regime and a degree of leeway over fiscal policy.

“I think that is one area where Europe may want to go and we have to be alive to that,” Mr O’Sullivan said, adding that Irish officials needed to be “forceful and intelligent” as the conversation evolved in the EU.

Fintech

Earlier, the Central Bank’s director of policy, Gerry Cross, said the bank was preparing to issue a discussion paper on financial technology [fintech] as regulators and lenders grapple with impact of a growing are of often-unregulated financial activity.

“For regulators, fast-evolving financial technology presents a range of challenges,” Mr Cross said at the Dublin conference.

“We have a mandate to ensure that financial services that require to be regulated are not being carried out by unregulated persons and firms. This is a challenge, because it is possible that the innovative service provides, coming from a different context than we have had in the past, may not even know that they are required to be regulated.”

AIB warned in a prospectus published last week in relation to its planned return to the main stock markets that banks were facing "competitive threats" from fintech firms, including Apple Pay, PayPal and CurrencyFair, which provide services such as online transaction and payments, currency trading, mobile banking, crowdfunding and peer-to-peer lending.

“With disruptive innovations coming from a host of different areas such as disruptive ledge technologies; peer-to-peer lending; robo advisers; innovative trading platforms; digital wallets; amongst others, financial services firms’ business models – how they interact with their customers and the products and services they offer – could change significantly in the coming years,” Mr Cross said.

“It requires financial firms to pay close attention to their business models and to their manner of functioning to ensure that both remain relent.”

Meanwhile, Mr Cross said he expected many London-based financial firms assessing options for new EU bases post-Brexit to make decisions “in the coming period”.

The Bank of England’s requirement that UK firms advise it of their Brexit contingency plans by the middle of next month is seen by many observers as a time when financial companies will publicly disclose their plans.

"At the Central Bank, we continue to see significant levels of engagement from firms who are considering relocating some of their activities from the UK in the context of Brexit," he said. "Firms have rightly been adopting the approach of planning for the worst, even while hoping for the best."