New strategy for IFSC to be ready in first quarter of 2015

The IFSC has dropped from 10th to 70th since 2009 in the Global Financial Centres Index


Simon Harris is a minister in a hurry. With about 76 weeks in office before the next general election, the recently-appointed Minister of State at the departments of finance, public expenditure and reform, and Taoiseach with special responsibility for the OPW, public procurement, and international banking, including the IFSC, knows he needs to move quickly if he is to achieve anything meaningful from his broad brief.

High among his priorities is the International Financial Services Centre, which was established by then taoiseach Charlie Haughey in the late 1980s. It now employs 32,700 people directly, contributes €2.1 billion to the exchequer, accounts for 14 per cent of our exports, and has established Ireland as a hub for a variety of specific services, including funds administration, corporate treasury functions, insurance, and aircraft leasing.

But, this week, the latest Global Financial Centres Index placed the IFSC at 70th among 83 financial centres globally. Back in 2009, it ranked 10th.

The slippage is described by Harris as “astonishing” but in many ways it wasn’t a surprise given the collapse in the Irish domestic financial sector following the 2008 crash and concerns abroad over whether Ireland would remain in the euro or require a second financial bailout from the EU and IMF.

“It was understandable that the reputation of the country as a financial services centre was going to take a hit,” he says.

Harris prefers to accentuate the positive, arguing that the ranking takes us out of our “comfort zone” and gives a certain urgency to the need for change.

“The economy is out of crisis mode now. It’s about time that we stopped firefighting and decided how we want to reposition the sector.”

A number of ideas have been kicked around by the public and private sectors for the past few years, including a focus on Islamic finance, establishing Ireland as a compliance hub, suggestions that we might follow Luxembourg’s lead by developing a single brand, and the launch of a Green IFSC.

“To be brutally honest about it, I think it needs to be more co-ordinated,” Harris says from his office in Leinster House. “There’s a risk of it being disjointed at times. We need to have a co-ordinated approach . . . so that we’re all singing off the same hymn sheet so to speak, and offering the same product for the financial services sector here.”

Harris then lists off the various entities that might be considered as stakeholders in the IFSC. These include, in no particular order, the Department of the Taoiseach, the Department of Finance, IDA Ireland, Enterprise Ireland and the State’s various embassies or trade missions around the world.

That’s to say nothing of regulator, the Central Bank of Ireland, or the various private sector groups with a focus on the IFSC, including the Banking & Payments Federation Ireland, Financial Services Ireland (an arm of employers group Ibec), the Irish Funds Industry Association, and IFSC Ireland, which employs the services of former taoiseach John Bruton to act as an ambassador-at-large for the centre.

There is also the IFSC Clearing House Group, which brings together representatives for both the public and private sector to discuss relevant issues. Harris will now chair its strategy group.

New strategy

“I’m not going to have a strategy written by anybody other than the public sector,” he explains. “The public sector will hold the pen.”

What about some input from the private industry?

“It would be foolhardy to put together a strategy that didn’t seek to build on the knowledge of the industry. It’ll be up to industry to decide who writes their submission and I will be providing an opportunity for them to input.”

Harris hopes to have a “lot of the heavy lifting” done by Christmas with a strategy drawn up in the first quarter of next year that can then be submitted to the cabinet for approval.

As a minister of state, the Fine Gael TD for Wicklow and east Carlow is not a member of cabinet and will have to hope that they buy into whatever strategy emerges over the next six months.

Harris insists that the strategy won’t be “some vague, aspirational document”.

“It will be an action-based strategy with tangible deliverables,” he says. “Beside each action it will have the name of the agency and person responsible for delivering, and the timeline in which it is to be delivered.”

He also wants to keep a regular watch of developments at EU level by developing a network of contracts in Brussels, and is keen that the footprint of the IFSC in the Dublin docklands, where the National Asset Management Agency has control over a large acreage of land, be enlarged.

“I certainly think space and capacity is an issue. Ultimately, it’s a matter for the Nama and the Department of Finance.”

Harris quickly adds that his mandate includes bringing jobs to other parts of the country and he cites how State Street employ hundreds of staff from locations in Naas and Kilkenny.

He won’t commit to a specific target for new jobs but wants his strategy to “dovetail with the [Government’s] action plan on jobs”.

Harris is the first minister for the IFSC since Gay Mitchell held a similar role in the Rainbow Coalition from 1994 to 1997.

“It’s a really exciting time to come into this,” he says. “The firefighting is over. Ireland is well positioned as an economy to sustainably grow at 3 per cent per annum for the next number of years. I’m using [the IFSC’s low ranking in] the global index as an opportunity. Let’s take that as the worst case scenario. It’s out there now but let’s work on getting back to where we were in 2009.”