Ireland will not drop standards for firms fleeing Brexit, Central Bank warns
Financial services companies seeking must be properly capitalised, Brexit event told
The Central Bank’s Michael Hodson addressing the conference on Thursday. Photograph: Paul Sherwood.
The Central Bank has warned overseas financial companies that it will not provide an “insurance policy” for inadequate planning for Brexit and drop standards to enable them to set up in Ireland quickly.
Michael Hodson, the financial regulator’s director of asset management and investment bank, told a conference about Brexit that the Central Bank would not lower assessment standards to ensure financial firms seeking approval to operate in the State are authorised by the end of March when the UK is due to quit the EU.
“We have no appetite for firms who have not done the work or for firms that have no real intention in setting up a substantial business in Ireland but rather just see their authorisation as a last resort for Brexit,” Mr Hodson told the Brexit seminar hosted by the British Irish Chamber of Commerce at Ulster Bank in Dublin.
Financial services companies seeking authorisation by the Central Bank must be properly capitalised and staffed with sufficiently experienced and knowledge people based in Ireland with a clear plan on when the firm will start operating and “robust risk frameworks” in place, he said.
The Central Bank would be “open and engaging” for any companies seeking authorisation with just 64 days until the UK is due to leave the EU, he told the event.
“We will continue to deal with firms that approach us for authorisation but at this late we will have to concentrate our efforts on those firms that have heeded our advice on engaging with us in a timely manner,” he said.
Worst possible deal
Minister of State for Financial Services and Insurance Michael D’Arcy said in his speech to the conference that a no-deal Brexit was the “worst possible deal” and “worst possible outcome” for the UK, Ireland and the EU.
“The Government remains firmly of the view that ratifying the withdrawal agreement between the EU and the UK is the best possible way for an orderly exit,” he said.
Mr D’Arcy said that while Brexit posed challenges, it was also creating opportunities, pointing to plans by financial firms such as Bank of America Merrill Lynch, JP Morgan, Citigroup, Barlacys Bank of China to establish or expand operations in Ireland. The Government would continue to try to “maximize those opportunities,” he said.
“We do not want to try to benefit from somebody’s else’s difficulties but the point I have always made is that if there are companies that have a Brexit difficulty, well Ireland can be part of their Brexit solution,” he said.
Ulster Bank chief economist Simon Barry said the recent strengthening in sterling was a sign of the market reacting positively to last month’s European Court of Justice decision that the UK can unilaterally revoke the “Article 50” Brexit process and that there is a majority within the UK parliament who don’t want a no-deal Brexit.
“We shouldn’t be surprised if we see further bouts of volatility for sterling. This is issue is not settled; there are plenty of twists and turns ahead,” he said.
He was optimistic that there would be an agreement for a deal given the consequences of a “crash-out Brexit” from a no-deal scenario.
“There is a fair chance that a constructive solution can be found here to avoid really destructive outcome, which would be so adverse to the UK and Irish economies,” he said.
He added, however, there would be continued uncertainty “until we see greater clarity from the political system and more explicit system of preference from the UK government.”