Banking giant to move $50bn from Irish unit
US financial services group Bank of America Merrill Lynch is set to transfer a $50 billion (€37.2 billion) derivatives book out of its Irish operation and into a UK subsidiary as part of a wider transfer of its Dublin-based capital markets business.
It is understood that the move will not affect headcount at the bank’s Irish operations, given that only a small number of people had been involved in the business in Dublin.
Historically, Merrill Lynch International Bank, which is Ireland’s largest bank, with some $593 billion in assets at the end of 2011, had booked the bank’s European trades. In 2011, the bank had trading assets or derivatives of $538 billion and reported a pretax loss of $453 million.
However, last year the bank announced that it would transfer “most of the group’s global markets business” in order to facilitate the simplification of Bank of America’s international legal entity structure.
This is part of a global rationalisation of the group’s structure, following on from the bank’s acquisition of Merrill Lynch in 2008.
The derivatives book will be transferred from the bank’s old Merrill Lynch entity, to a UK entity in a move that will take until the first quarter of 2014 to complete.
It is also thought that the move will offer tax incentives to the bank.
Speaking on Bloomberg television yesterday, John Bruton, chairman of promotional body IFSC Ireland, said the plan may “be driven in part by internal tax considerations”, given that losses in the UK are more easily set off against profits in the UK.
Bank of America Merrill Lynch will retain its other activities in Dublin, which include corporate and investment banking, custody and aviation finance.