Credit Suisse may seek full Irish licence as Brexit looms

Credit Suisse, which set up a European hub in Dublin last year to service hedge fund clients, may apply for a full banking licence in Ireland as it prepares to move jobs out of London following the UK's decision to quit the European Union, according to sources.

Switzerland’s second largest bank opened a trading floor in Dublin in January 2016 for its prime services business in Europe, initially targeting 40 trading and other front-office roles, with a further 60 in middle-office and support roles.

Credit Suisse, which has the equivalent of a €28.5 billion market capitalisation, was considering moving activities to both Dublin and Frankfurt in the wake of Brexit, one of the sources said. However, no decisions have yet been taken.

The ultimate extent of any expansion in Ireland in the medium term may depend on whether the banking giant decides to seek a full Irish banking licence.

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“Credit Suisse is currently exploring solutions to various outcomes including a ‘hard Brexit’,” a spokeswoman for the bank said. “We are refining our in-depth analysis and we are looking at ways to maintain access to EU clients and markets. We will optimise our current infrastructure as well as leveraging our existing EU presence where appropriate.”

The group has “the flexibility to respond to potential changes in the UK and EU financial services industry in the future”, with its London operations and a number of subsidiaries and branches across Europe.

Noreen Doyle, the Irish-American vice-chair of the board of directors of Credit Suisse, said at a conference in Dublin in January that the bank was looking at various European cities to which it could move some UK financial services in the wake of Brexit.

Restructuring

Credit Suisse chief executive Tidjane Thiam said the following month that the group had begun cutting its London workforce before the referendum, with staff levels in the English capital falling from 10,000 to 8,000 by the end of last year. It had a medium-term goal to reduce staff in the UK capital to 5,000, he said. Mr Thiam has instigated massive restructuring at Credit Suisse since he took over in June 2015.

Credit Suisse received regulatory approval in December 2015 to operate as a direct branch of the group’s Zurich headquarters, becoming the first and only bank to date to avail of a change in Irish law in 2013 that allowed non-EU banks to set up a branch in Ireland.

Prior to the amendment, banks from outside the EU could only set up Irish-authorised and regulated subsidiaries, with their own capital and funding structures.

Credit Suisse’s decision to move the European prime services hub to Dublin was largely down to the city being a less costly location for the operation than London.

Securing a full banking licence in Ireland would give the bank greater flexibility to base more business in Dublin, including financial services that could be “passported” throughout the EU.

It is expected that a number of banks, insurers and fund management companies will make decisions on their post-Brexit strategy in the coming months, after British prime minister Theresa May officially started the exit process two weeks ago with the triggering of article 50 of the Lisbon Treaty.

Frankfurt, Luxembourg, Paris and Brussels are among the main locations competing with Dublin to lure financial services activity from London in the wake of the Brexit referendum last June.

Last week, the Bank of England wrote to hundreds of banks, insurers and other financial firms that it regulates, giving them until July 14th to detail their contingency plans for various Brexit scenarios.