Brexit: Central Bank creates new teams

The Central Bank of Ireland is setting up new teams to deal with Brexit-related authorisation queries across banking, insurance, investment firms, investment funds and financial market infrastructures, Governor Philip Lane said on Tuesday.

Speaking at the Barclays European Financial Capital Summit, Mr Lane said: "This is part of a broader initiative to expand staffing levels in the bank in view of the expansion of our mandate in recent years, the increase in the size of the international financial services sector and the implementation of our pro-active supervision and inspections model."

Earlier this year it emerged that the Central Bank had decided to allocate 28 out of 170 new full-time staff to address Brexit-related issues. However, it is understood that this figure will now increase.

“The Central Bank is continuing to assess the resources required to deliver our expanded mandate and in light of the evolution of the financial services sector in Ireland,” a spokeswoman for the regulator said.

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In his speech, Mr Lane said a substantial proportion of Brexit-related queries at this stage relate to a “scaling up” of already-sizeable lines of activity here or an expansion of the range of activities of currently-licensed financial entities.

‘Stringent approach’

“That said, Ireland is likely to become a host to new categories of financial services. Accordingly, we stand ready to expand our range of supervisory activity as required, in close collaboration with our international regulatory colleagues within the European System of Financial Supervision.”

Mr Lane said it was important that a “stringent approach” to prudential supervision was widely accepted, so that the post-Brexit evolution of the European financial system did not involve any dilution in the capacity of supervisors to ensure effective regulation of international financial firms.

“As financial firms work out strategies to manage the implication of Brexit, it is important for the policy community to ensure that regulatory arbitrage does not play a material role,” he said. “This applies in relation to locational choices and also in relation to options in terms of organisational structures.”

Undercut

His comments on regulatory arbitrage follow concerns raised recently with the European Commission by Eoghan Murphy, the Minister for Financial Services, who claimed that Ireland was being undercut by rival centres competing to host financial firms looking for an EU base outside London post Brexit.

Mr Lane said the Central Bank’s responsibility was to ensure that firms authorised to operate from Ireland demonstrated compliance with EU requirements.

“To this end, we seek to ensure that an entity will be substantively run from Ireland and that the setup permits effective supervision, with local management accountable for decision making. From a supervisory perspective, it is simply not sustainable to entertain proposals that fall short of these basic requirements.”

Earlier this month, Sylvia Cronin, the Central Bank's director of insurance supervision, said that it had received five applications for authorisation from insurance or reinsurance undertakings with another five signalling a "firm intention" to apply.

She said another 20 insurance entities has expressed an interest in authorisation.