Subsidiary of Germany’s DZ Bank closes with loss of 20 jobs
Departure from IFSC is one in series of German banks withdrawing from Dublin
German banks came to Dublin to avail of the IFSC 10 per cent corporation tax regime in the 1990s. Photograph: Bryan O’Brien/The Irish Times
DZ Bank Ireland, the Irish subsidiary of German bank DZ Bank, has become the latest former IFSC bank to hand back its banking licence and close its Dublin branch.
The bank, which in recent years was particularly active in the securities and asset-backed securities business, closed its Dublin branch on March 31st, with the loss of 20 jobs.
The move follows a decision last year by the supervisory board of DZ Bank AG to close the branch.
“This decision was taken as a result of DZ Bank Group’s focus on ‘VerbundFirst’ and its concentration on the Volksbanken Raiffeisenbanken and their customers,” a spokeswoman for the bank said.
VerbundFirst involves putting the needs of the local banks and their clients ahead of DZ Bank’s own profit maximisation and focuses on the domestic market.
DZ Bank first came to Dublin in 1995 when it received an IFSC licence incorporation as SGZ (Ireland) plc.
At one point it employed almost 30 people, had assets of close to €4 billion and was focused on investing in high-grade credit products including floating rate notes and asset swaps, and syndicated and bilateral loans to a range of parties such as financial institutions.
The spokeswoman said a social compensation plan had been put in place to provide support for the 20 or so employees in their search for new employment.
The banks first came to Dublin soon after the launch of the IFSC regime, attracted by the possibilities to establish so-called special purpose investment companies (Spics), which would allow them to manage corporate liquidity tax-efficiently.
Some have done so since the financial crisis, against a background of increased scrutiny of lower tax jurisdictions such as Ireland in the German media.
In December 2015, Depfa Bank, which first obtained a banking licence in 1993, also handed back the banking licence for its subsidiary, Depfa Public Finance Bank.
In 2007 it was sold to Munich-based Hypo Real Estate Holdings, but subsequently ran into funding issues after the collapse of Lehman Brothers. It is now a subsidiary of German state agency FMS Wertmanagement AöR and its purpose is to manage and run down its public sector finance asset base, a process which is still expected to take some years.
According to a spokeswoman for the bank, the Dublin branch now employs 134 people with assets of €36.7 billion and, while the bank is winding down, “there is no official timeline for the closure of the Dublin branch”.
It’s not just German banks that have been downsizing their Irish operations. In January, Bank of America revoked one of its Irish banking licences, for the entity known as Bank of America National Association (Dublin Branch), although it still retains a licence for Bank of America Merrill Lynch International Limited.