International banks fret over recruitment and regulation

About 70 per cent of international banking and investment firms expect to grow their Irish operations this year, but significant numbers say they are facing challenges attracting staff and with new regulatory requirements, according to a new report.

The report was published on Tuesday by the Federation of International Banks in Ireland (FIBI), which is the representative body for international banking and investment firms here, representing more than 30 international groups.

Investing in Ireland’s Future Success states that more than 40 per cent of FIBI firms expect to increase the number of people they employ this year and invest further in technology and innovation here. That is despite the fact the majority (73 per cent) face challenges accessing talent with key skills.

Almost two in three have identified the increasing regulatory requirements as the greatest challenge for the sector in the next five years.

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FIBI chairman Fernando Vicario said Government and regulators must continue to collaborate with the industry to ensure a positive operating environment. “We cannot afford to take anything for granted,” he said.

“International financial services investment is mobile by its very nature. We welcome the Government and the regulators’ continued collaboration with the industry to ensure Ireland remains a key European and global financial hub for banking and investment firms.”

Mr Vicario added Ireland has become “an important centre” for technology in banking with several international banks setting up innovation hubs or labs here, harnessing evolving blockchain and AI technologies and “attracting significant numbers of highly trained staff”.

However, on difficulties sourcing staff and staff retention, the report said personal tax levels and housing shortages are “likely contributory factors”. Two-thirds of respondents said they had experienced or expected to experience difficulties accessing talent with key skills locally.

Respondents also highlighted issues with regulatory and compliance (45 per cent), digital skills, including data analytics and artificial intelligence (32 per cent), risk management (32 per cent) and ESG/sustainable finance (23 per cent).

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Ireland’s international banks make a significant contribution to employment across the State, the report says. At the start of 2024, FIBI member banks and investment firms employed over 14,400 people. This is up almost 18 per cent on pre-pandemic 2019 levels.

The latest figures show that foreign-owned, agency-supported companies in the wider business, financial and other services sectors spent almost €5.3 billion in the Irish economy in 2022, 19.9 per cent more than in 2021. That included more than €3.6 billion in payroll costs alone, as well as spending on Irish materials and services.

Net tax receipts from financial and insurance activities increased by 12.9 per cent in 2022 to more than €6.4 billion, according to data from the Revenue Commissioners. Both higher corporation tax revenues on profits and payroll taxes on employees contributed.

Ireland was the eighth largest exporter of financial services in the world in 2022, and now hosts operations for more than 30 international banks.

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