THE FINANCE DUBLIN BREXIT CENTRE
Welcome to the Finance Dublin Brexit Centre. It is an online resource of articles, sources, information, data, analysis. Its aim is to provide concise and understandable information on the practical business and personal implications of Brexit for Ireland's finances and financial services industry, its clients, and the people working in it. This will include its impact on legislation, regulation, financial services sectors, including insurance, asset management and investment funds, Fintech, banking, aircraft leasing and aviation financing, and Tax. The emphasis is on the provision of original added value information.

MAIN CURRENCY MOVEMENTS, POST BREXIT:
See today's chart for GBP/USD
See today's chart for GBP/EUR
See today's chart for EUR/USD (The Republic of Ireland's main external exchange rate)

The below ready reckoner shows the Post Brexit Lows for the GBP.


GBP/USD
POST BREXIT LOW (Oct 11th 2016): $1.1841*
STERLING'S % POST BREXIT FALL AGAINST THE DOLLAR SINCE BREXIT: 20.4%
(Close on date of Brexit vote (June 23rd) : $1.4877)
* ("Flash crash" in Asian markets on 7th October 2016 saw GBP touch $1.1491)
GBP/EUR
POST BREXIT LOW (Oct 11th 2016): €1.0967
STERLING'S % FALL AGAINST THE EURO SINCE BREXIT: 16.1%
(Close on date of Brexit vote (June 23rd) : $1.3072)

FINANCE DUBLIN BREXIT CENTRE POSTINGS TIMELINE:

Friday December 2nd 2016:

IDA Ireland, Ireland’s foreign investment agency, has launched a new Brexit focused digital, print and TV advertising campaign

Monday November 28th 2016:

Conflicting signals on Irish economy - Bank of Ireland's Economic Pulse indicator fell to lowest point for year this month, but Investec economics team opines that the worst may have passed

Wednesday November 23rd 2016:

UK Autumn Statement reaffirms committment to cut corporation tax to 17% by 2020, but big 'Brexit' borrowing hit revealed

Wednesday November 9th 2016:

Implications of US Presidential Election Result

Tuesday November 8th 2016:

Matheson Brexit Forum posted at www.financedublin.com -
See: law firm Matheson's online Brexit Forum: Matheson Brexit Forum

Thursday November 3rd 2016:

UK High Court rules that Article 50 cannot be triggered without full Parliamentary approval

Wednesday November 2nd 2016:

Sterling bounces back, as dollar weakens on Trump resurgence in US polls

Sterling's recovery continued against the US dollar, touching $1.2342 today, up 1.5% against the USD since FBI chief James Comey announced a reopening of the FBI's investigation into US presidential candidate Hillary Clinton on Friday. The GBP rose a more muted 0.5% off the bottom, touching €1.1132 against the euro.

With attention off 'Brexit', the focus has been on the "Cable" (the US - GBP exchange rate), with prospects of a Trump presidential victory, shown in poll movements associated with dollar weakness, because Donald Trump would favour a weaker dollar, in line with his strong protectionist stance on foreign trade matters.

Tuesday November 1st 2016:

British-Irish Chamber survey on Brexit finds that nearly 20% of firms are setting up a team to deal with it

Tuesday October 25th 2016:

Noonan calls for European Banking Authority to be relocated to Ireland after 'Brexit'

As part of the negotiations associated with the UK’s decision to withdraw from the EU it will be necessary for the European Banking Authority to relocate to an EU Member State from its current location in London, and today the Government agreed, on the recommendation of the Minister for Finance, Mr Noonan "to make a public declaration of interest in Ireland becoming the location for the offices of the European Banking Authority".

Monday October 24th 2016:

The Irish Investment Funds Industry is a jewel in the Irish economy, and will be a major platform for maintaining a passport for collective funds across Europe after Brexit. Finance Dublin's Special Report provides a comprehensive profile of the readiness of the platform, which is in a robust state.

Thursday October 20th 2016:

Law firm McCann Fitzgerald holds Brexit seminar in conjunction with British Irish Chamber of Commerce, addresssed by leading financial services firms, and chaired by former chair of the firm John Cronin, who says, don't be shy to promote Ireland as a hub for businesses exiting the UK because of Brexit.

Tuesday October 11th 2016:

Sterling slide continues as new lows see currency down by more than 15% post Brexit against the euro, and over 18% against the US dollar
Sterling touched a new post Brexit low against the US dollar today of $1.2123(See Current rate: Bloomberg) and a new low of €1.0967 against the euro. (See Current and historic rates: Reuters).
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MAIN CURRENCY MOVEMENTS, POST BREXIT:
See today's chart for GBP/USD here
See today's chart for GBP/EUR here
See today's chart for EUR/USD (The Republic of Ireland's main external exchange rate) here

The below ready reckoner shows the Post Brexit Lows for the GBP.

GBP/USD
POST BREXIT LOW (Oct 11th 2016): $1.2123
STERLING'S % FALL AGAINST THE DOLLAR SINCE BREXIT: 18.5%
(Close on date of Brexit vote (June 23rd) : $1.4877)

GBP/EUR
POST BREXIT LOW (Oct 11th 2016): €1.0967
STERLING'S % FALL AGAINST THE EURO SINCE BREXIT: 16.1%
(Close on date of Brexit vote (June 23rd) : $1.3072)

Tuesday October 11th 2016:

Minister for Finance Publishes getting Ireland 'Brexit Ready' document

Thursday September 29th 2016:


There's no chance that Ireland will follow the UK out of the EU - says Minister for Foreign Affairs Flanagan at British Irish Chamber of Commerce 'Brexit' seminar

Tuesday September 27th 2016:


Central Bank Governor says Central Bank will have the staff to facilitate the needs of banks relocating to Ireland due to 'Brexit'

Central Bank of Ireland governor Philip Lane has emphasised that UK-based financial businesses that may be interested in relocating to Ireland to retain 'passporting rights' within the EU are still in research mode at this stage.

Tuesday August 30th 2016:


Irish Government says the EU is inappropriately interfering in an issue of Irish sovereignty in announcing its plan to fight the EU ruling on Apple taxes in the European Courts

The Irish Government has thrown down the gauntlet in announcing its 'profound disagreement' with the EU ruling that Ireland should seek €13 billion in back taxes from Apple, issued today. It argues that the EU case in incoherent, is in contravention with recent international statements, including from the US Treasury, and furthermore makes no recognition of the nature of the Irish tax system. Referring to Ireland's Common Law legal approach to taxation, "Ireland does not do deals with taxpayers", the Government statement says.

Thursday August 18th 2016:


CFA Survey: Ireland to be a winner in post Brexit financial services

In a survey of the 2,000 investment professionals by CFA Institute, 62% said that Dublin will be one of the big winners from Brexit, headed only by Frankfurt with 69%. The vast majority of respondents - more than 80% - said they believe that London as a financial centre will lose out as a result of Brexit.

Thursday July 28th 2016:


British-Irish Chamber of Commerce survey quantifies feelings about the threats and opportunities from Brexit

The British-Irish Chamber of Commerce has just published a survey of 486 businesses, mostly (400) located in the Republic on the threats and opportunities Brexit offers:

It was conducted in July.

Wednesday July 27th 2016:


Former EU financial services chief Michel Barnier entrusted with task of chief Brexit negotiator by Juncker

Michel Barnier said he was “honoured” to be appointed the EU’s chief negotiator, a role in which he will report directly to European Commission president Mr Juncker.

He is regarded as an "old-style Euro integrationist", so described by prominent Conservative MEP Daniel Hannan, determined to set up
"an EU superstate", and certainly not signallling a willingness on the part of the Brussels Commission to adopt a conciliatory approach that would ease a UK divorce from the EU.

65-year-old Barnier is a former vice-president of the European Commission and a member of the European People’s Party, the largest grouping in the European Parliament. Although a member of the party grouping that includes Fine Gael, Barnier's career in charge of financial services in the EU saw him often on different sides to Ireland, and the UK, as well as other northern and eastern EU states, for example in relation to the Financial Transactions Tax, an issue that was raised again by German finance minister Schauble this past weekend.

When serving as the EU’s financial services chief between 2010 and 2014, he was dubbed the ‘most dangerous man in Europe’ due to his power over the City of London. During his term, a host of new financial laws were approved by the EU many of which Britain challenged in the ECJ, the European Court of Justice. When he was appointed, then-French president Nicolas Sarkozy hailed a victory over "Anglo-Saxon capitalism" and declared Britain "big losers" from the EU's decision to put Mr Barnier in charge of financial regulation.

Announcing Mr Barnier’s appointment, Mr Juncker said: “I am very glad that my friend Michel Barnier accepted this important and challenging task. I wanted an experienced politician for this difficult job. “Michel is a skilled negotiator with rich experience in major policy areas relevant to the negotiations.

“He has an extensive network of contacts in the capitals of all EU member states and in the European Parliament, which I consider a valuable asset for this function".

Mr Barnier said he would begin work on October 1, when he will begin work for the upcoming Brexit talks with a team of EU officials.

Tory MEP Daniel Hannan described Mr Barnier in an interview with UK newspaper website Express.co.uk: as "an old-style Euro-integrationist. He wants the EU to be something like a single country". "Well, good luck to him. Once Britain leaves, that will be a much more feasible outcome. We should aim to ensure that the process of Brexit is cordial and mutually beneficial.", he said.

Tuesday July 19th 2016:


Dombrovskis: Brexit means CMU is needed more than ever

Valdis Dombrovskis, the EU Commission VP who on 18th July took over the European Commission’s financial stability, financial services, and capital markets union portfolio from Lord Jonathan Hill, has said he will continue Lord Hill's excellent work to 'deepen the capital markets, to strengthen Europe’s Banking Union and to review existing regulation to check and make sure that it is as growth friendly as possible' adding that he will build on work and where possible quicken the pace of implementation. He was speaking at the Atlantic Council meeting in Washington D.C.

'We want the UK to remain a close partner. But any future agreement concluded with the UK as a third country will have to balance rights and obligations. Access to the Single Market would require the UK to accept four freedoms: free movement of goods, services, capital and labour. The first step now needs to come from the UK. The new government has to set out what it wants from a future relationship with Europe. That would give us more predictability and a basis on which to negotiate...'

He added that completing Europe's Economic and Monetary Union is an essential part of maintaining economic stability in the EU and that with Europe’s largest financial market set to leave the EU the importance of creating a Capital Markets Union is needed more than ever. He added that the analysis of feedback on Lord Hill's call for evidence on financial regulation has been completed and the Commission will be taking forward recommendations to increase funding to the wider economy, make EU legislation more proportionate; and reduce the compliance burden for businesses.

You can view the full speech here.


Thursday July 14th 2016:

NTMA funded €6 bn of the year's target of €6-10 bn in the first half of the year at a weighted average yield of 0.95%, but warns the effect of Brexit on Irish credit spreads will take time to assess

Wednesday July 13th 2016:

BREXIT Symposium in this month's issue of Finance Dublin:

Brexit: Symposium on the implications for international financial services in Ireland
The contributors include Kieran Donoghue, Head of International Financial Services, Corporate Strategy and Public Policy, IDA Ireland, Professor Michael Mainelli, Executive Chairman of Z/Yen Group, publisher of the GFCI Index, the globally acknowledged benchmark of world positioning of financial services centres, and the International Member of IFS 2020’s Industry Advisory Committee; Richard Walsh, CEO of the newly formed fintech industry body in Ireland, the FinTech & Payments Association of Ireland; William Slattery, former head of investment services for EMEA at State Street, a former chairman of Financial Services Ireland, and a member of the IFSC Clearing House Group; Susan Dargan, Chairperson of Financial Services Ireland, and Head of State Street Global Services Offshore; Neil Ryan, former Assistant Secretary General in the Department of Finance, Ireland, and CEO at Wells Fargo Bank International in Ireland; Kevin Thompson, CEO of Insurance Ireland, and Dermot Hardy, Head of Treasury at Aareal Bank AG Dublin Branch, and a founding member of the Irish Debt Securities Association.

CSO revised GNP growth rate of 18.7 per cent in 2015 results in national debt-income ratio falling below 100% for first time since the financial crisis

The Finance Dublin: Irish Government Debt Clock is recording a 14.6 per cent drop in the debt/GNP ratio, folllowing the upward revisions to national income published by the CSO.

Monday July 11th 2016:

Euro records new low against dollar, but not sterling in early trading today
The euro touched a new post Brexit low against the US dollar in early trading this morning, but sterling remained above its Post Brexit low. (See Current rate: Bloomberg). Sterling's lowest earlier today was 0.3% above its post Brexit low of $1.2835. The euro's low against the dollar was 3.2% down on the eve of Brexit level, the largest post Brexit discount yet seen. Both European currencies recovered strongly during morning trading in Europe, buoyed by the resolution, dealers said, by the resolution of the Conservative leadership contest in favour of Theresa May, who becomes incumbent Prime Minister. (See Current and historic rates: Reuters).
(Also See Currency market movements - a short term indicator of the potential Brexit impact on the Irish and UK economies).
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MAIN CURRENCY MOVEMENTS, POST BREXIT:
See today's chart for GBP/USD here
See today's chart for GBP/EUR here
See today's chart for EUR/USD (The Republic of Ireland's main external exchange rate) here

The below ready reckoner shows the Post Brexit Lows for the GBP. The Post Brexit lows saw sterling 13.7 per cent down on its immediate pre Brexit level against the dollar. Sterling was down by 11.09% against the euro. The euro's Post Brexit low, (set on July 11th) against the USD was down 3.2% on its pre Brexit level (of 1.1385).

GBP/USD
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): $1.2835
% FALL SINCE BREXIT: 13.73%

GBP/EUR
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1622
% FALL SINCE BREXIT: 11.09%

EUR/USD
NEW POST BREXIT LOW (03.30 HRS GMT, 11-07.2016): 1.1021
% FALL SINCE BREXIT: 3.2%
PREVIOUS POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1039

Friday July 8th 2016, 12.00 hrs:

Sterling volatility continues, with currency trading in a range below 1.30 and above $1.288 (See Current rate: Bloomberg). Its low today was 0.3% above its post Brexit low of $1.2835 (See Current and historic rates: Reuters).

MAIN CURRENCY MOVEMENTS, POST BREXIT:

The below ready reckoner shows the Post Brexit Lows for the GBP. The Post Brexit lows saw sterling 13.7 per cent down on its immediate pre Brexit level against the dollar. Sterling was down by 11.09% against the euro. The euro's Post Brexit low against the USD was 3.03%.

GBP/USD
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): $1.2835
% FALL SINCE BREXIT: 13.73%

GBP/EUR
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1622
% FALL SINCE BREXIT: 11.09%

EUR/USD
POST BREXIT LOW (03.05 HRS GMT, 06-07.2016): 1.1039
% FALL SINCE BREXIT: 3.04%

Wednesday July 6th 2016:

‘Ireland can become British-EU gateway after Brexit' - British Irish Chamber of Commerce

6th July 2016, 17.15 hrs: The British Irish Chamber of Commerce said Ireland needs to consider its unique position within the EU and how it can facilitate trade between Britain and the EU post-Brexit. The Chamber yesterday said that Ireland and the UK need to now think about the deal they will need to continue trading uninterrupted after Brexit. In considering this deal the Chamber said that Ireland can act as a gateway for trade between the UK and the rest of the EU.

6th July 2016, 09.30 hrs: IDA talks to Central Bank about Brexit fallout - Shanahan
Martin Shanahan, CEO of the IDA, said at a press conference this morning there had been a ‘heightened level of activity in the last week and a half.’ in relation to FDI enquiry levels. There would be mobility out of the UK, that was now certain, he said, with 'international financial services and technology being the key two sectors.’

He said that IDA had met the Governor of the Central Bank yesterday, and outlined measures already being taken by the state FDI promotional agency post Brexit.

6th July 2016, 07.50 hrs GMT: Sterling slump continues overnight, breaching $1.30 for the first time in over 30 years, (See Current rate: Bloomberg) touching a new low of $1.2835 (See Current and historic rates: Reuters)

The overnight lows saw sterling 13.7 per cent down on its immediate pre Brexit level against the dollar. Sterling was down by 11.09% against the euro. The euro's Post Brexit overnight low against the USD was 3.03% lower.

The overnight fall is despite an announcement from the Bank of England yesterday that it will lower capital requirements for UK banks (a reversal of its decision to increase its Counter Cyclical Capital Buffer in March 2017). This, along with some other technical changes, were said by the bank to allow regulated banks to release GBP 5.7 billion of counter-cyclical capital buffers that they are to hold. The Bank of England announced the cut in capital requirements after warning that the risks posed by Brexit were already beginning to crystallise and the outlook for financial stability was “challenging,”

The BoE, announcing a reversal of its decision to increase the Counter Cyclical Capital Buffer in March 2017, whilst also announcing some technical changes that would ease banks’ capital requirements by GBP5.7bn.

Tuesday July 5th 2016:



5th July 2016,17.00 hrs GMT: Sterling resumes initial post Brexit downward trend, hitting a 31 year low of $1.3010

The pound's exchange rate, a primary indicator of the effect of Brexit on the UK economy, fell by as much as 2.0% today to hit $1.3010, its lowest since September 1985. That left it 12.5% below its levels before the June 23 referendum.

Sterling was also down 1.4% against the euro at 85.48 pence per euro, the lowest level since late 2013. And against the Bank of England’s trade-weighted basket of currencies, sterling fell to its weakest in more than three years.

Bloomberg quoted Barry Eichengreen, a professor of economics at the University of California Berkeley as follows “A country’s economic size measured in other currencies -- for the U.K., measured say in dollars -- is an indicator of its capacity to project power and influence internationally”.

Worryingly for the Bank of England, there have been anecdotal reports of capital account movements, deriving from investor concerns to hedge against sterling assets in pension and other investment funds. If sterling begins to be targeted as a weak currency, the Bank of England, alone outside the Eurozone, may face strains that Governor Mark Carney's GBP250bn sterling support fund may be stretched to cover.

Some bank analysts have suggested $1.20 as a likely destination, such as HSBC Holdings. Legendary macro hedge fund currrency investor George Soros has suggested $1.15.

See: 24 June 2016: Currency market movements - a short term indicator of the potential Brexit impact on the Irish and UK economies

Monday July 4th 2016:


4th July 2016: Osborne's pledge of a UK 15%, or lower, corporation tax rate

In light of George Osborne's pledge to bring in a corporation tax rate of 15% or below in the UK see this (May 2016) backgrounder from the Irish Tax Monitor, May 2016, of a panel of Ireland's leading corporation tax advisers on the increasing evidence in the past year that the UK has identified the Republic of Ireland as its leading tax competitor for a United Kingdom in or out of the EU.

Finance Dublin roundtable in the Irish Tax Monitor: "Is Ireland in danger of losing out to UK on tax competitiveness?"

The move is already being questioned as the beginning of the UK's negotiations with the EU on Brexit, but there is no doubt that it represents a clear and obvious threat to Ireland's tax competitiveness.

Given that Ireland's transparent 12.5% corporation tax rate is the single most potent weapon in Ireland's attractiveness as a location for foreign direct investment, the single most powerful driver of the success of the Irish economy, the move will immediately prompt the question as to whether there needs to be an equal response from Ireland in the forthcoming Budget, scheduled to be unveiled in October.

The timing of the October Budget, almost six months ahead of the next UK Budget gives the Irish Finance Minister an opportunity to respond ahead of time to the threat.

There are increasingly voiced suggestions from industry and FDI companies in Ireland that that Ireland should improve its personal tax code to be more friendly to attracting key executives in internationally mobile companies.

International comparisons indicate that while Ireland is competitive on the corporation tax front, it is not in relation to the personal taxation of internatonally mobile key personnel in globally trading corporations. This has been the case since Ireland's unIIateral withdrawal of the "remittance basis of taxation" since 2006, and the economic crisis-related hike in personal tax levels, post 2008 through measures such as the employment levy.

A recognition of this from the State through the introduction of the SARP (Special Assignee Relief Programme) was made in 2012, with the inclusion of the programme in the 2012 Budget. However, it has generally not been successfuul, most tax advisers believe, with little takeup in evidence since its introduction. See this: Is it time to abandon SARP and start again?.

Accordingly, calls to improve Ireland's tax offering in light of the UK's direction in relation to tax will increasingly put pressure on the Irish Government to respond in ways that will preserve the Republic's FDI offering. This could include making the SARP rules more effective.

It will also raise the question as to whether the Republic of Ireland should start talking about reducing its general, economy-wide, corporation tax rate to 10% - the old rate that prevailed in Ireland for manufacturing businesses in the 1980s and 1990s.

The organisation also published its annual report for 2015, showing that total client employment is now at 187,056.

4th July 2016: "After Brexit: Strategies for the development of the International Financial Services Industry in Ireland"
The July 2016 edition of Finance Dublin will carry a Symposium of Contributions from leading thinkers and players providing a forum of ideas and suggestions as to the development of strategies to build on Ireland's historic welcome for IFS business, working in conjunction with a post brexit Britain and Northern Ireland, as continued partners in the new environment

Friday July 1st 2016:


Brexit, and aircraft leasing - what are the consequences for Ireland as a global centre?

1st July 2016: The latest issue of Aviation Finance surveys the impacts of Brexit across a range of issues. Among them are an assessment of the impact on airlines, including IAG and Ryanair, and it notes EU regulations requiring that airlines in the EU must have a majority 50% EU ownership to participate in the common European aviation area.
Aspects of the tax issues affecting leasing companies are also addressed in the below articles.

Viewpoint - 'Ireland will remain the most highly valued jurisdiction by aircraft lessors' - Joe Gill, Contributing Editor, Aviation Finance

Suggestions that an EU enforced increase in the Irish corporate tax rate could lead to aircraft lessors switching their operations from Dublin to London "wildly speculative" - Woods

Recent issues of the Irish Tax Monitor have featured the UK's increasing interest in using corporation tax as a weapon to attract FDI, emulating Ireland. This can only be expected to increase post Brexit. See this article, for example, in the May issue of the Tax Monitor Ireland is now seen by the UK as its main tax competitor

Thursday June 30th 2016:


30th June 2016: The June issue of Finance Dublin published a report suggesting that London was facing erosion of its pre-eminent EU crown as the Fintech investment cluster of investors and developers, citing a Financial News survey of financial services executives, with attention shifting to Berlin, Frankfurt, Amsterdam and Dublin. See this assessment of the issues from a fintech investor.

Wednesday June 29th 2016:


29th June 2016: Michael Metcalfe, head of macro strategy at State Street Global Markets considers five core issues: 1) Were the hedges high enough?; 2) Sterling's movements; 3) Ready for interest rate cuts?; 4) A reduced appetite for risk?; 5) Watch the “symptoms” not the system?

29th June 2016: Corporate law firm McCann FitzGerald held a Brexit Symposium on 28th June 2016 in Dublin, part of a series Brexit events held by the law firm - see this report in Finance Dublin, February, of its pre-Brexit Symposium in Guildhall in the City of London. A summary guide to Irish corporate governance rules (applicable to regulated financial services firms and quoted corporates in the Republic of Ireland), authored by McCann FitzGerald partners David Byers and Paul Heffernan, has just been published in the Irish Chapter of The International Comparative Legal Guide to: Corporate Governance 2016 (published by Global Legal Group Ltd). It is a useful summary of the code as it applies to IFS companies.

29th June 2016: Brian Hayes MEP suggests a Dublin home for the European Banking Authority.

Tuesday June 28th 2016:


UK solicitors admitting to practice in Ireland in record numbers

Figures from the Law Society show that 186 solicitors from the UK admitted to practice in Ireland during the first six months of 2016, up from 50 in the first half of 2015.

AIFMD - Ireland is in the front line as an alternative passport jurisdiction for hedge fund managers

UK-based hedge fund management companies, registered under the AIFM Directive will need to obtain EU passports, and will look to obtain passports in EU states, notably Ireland and Luxembourg, currently the major domiciles for UCITS and professional funds sold to investors within the EU.

Cross border fund management outsourcing providers, such as Dublin and Luxembourg-based Carne financial services has begun targeting UK fund managers to do so.

Carne says it is "the only company with established third-party UCITS and AIFM management companies in both Ireland and Luxembourg and can offer ‘plug and play’ solutions where the portfolio management function can be delegated to the UK manager".

"Carne is a strong partner with 70+ staff in Luxembourg and Dublin dedicated to providing management company solutions and can assist with the set up of your own management company in both Luxembourg and Dublin and provide directors and designated directors for the substance you would need." it says.

Others, such as Laven partners, a UK based manager, say that it will consider passporting its regulated umbrella to Ireland, the Netherlands or Malta.

"Risk Off"? - what the largest hedge fund says

"The UK voting to leave the EU is a clear warning signal that the rise in populist/separatist positions has reached levels that they can change the status quo significantly," according to the co-CIO of the world largest hedge fund, Bridgewater, Greg Jensen today.

"The global economy and financial system relies on the euro and the ECB, and the continued existence of the euro depends on the cooperation of the Eurozone countries. If the UK leaving the EU caused a 10% swing, what would a set of political events that raised questions about the future functioning of the ECB cause?"

Investment markets remain in "Risk Off" mode

Investment markets overnight remained in a "risk off" mode, as they have been since voting in the Brexit referendum became clear that the UK was going to vote to exit the EU. Sterling's latest movements against the key currencies of importance to the IFSC can be seen here.

A market in 'risk-off' mode means that it should be avoided by asset managers seeing to preserve capital, as investments in such situations are statistically unpredictable, in other words, a pure gamble.

Because the Brexit referendum was a binary event - in other words there was only one of two possible outcomes, it was impossible for the financial markets to predict the outcome. Markets are notoriously bad at predicting binary events. They are worse at predicting events in a chain that have yet to involve continued binary results that will have long term unintended, (or intended), consequences that are impossible, at this point, to predict.

Since the vote, the (exchange rate adjusted) volatility encountered in a host (over 100) of very important secutiries, equity, commodity and bond markets has been in 'risk off' territory - statistically measured as 3 or more standard deviations from the norm - i.e. in the less than 5% range of experience.' Another word for this is a 'Black Swan' event, last extensively used in reference to the fall of Lehmans.

The above point about the Brexit impact being particularly unpredictable is underlined in this article which looks at the (GBP denominated) UK equity market impacts of the UK referendum - pointing out that the net effect of Brexit over a longer period should be considered as the post-Brexit movements were preceded by a long upswing prior to the vote.

Monday June 27th 2016:


Practical business considerations for financial services

Corporate law firm William Fry has prepared an overview of some of the practical business considerations for financial services in these areas: Asset Management; Baking; Re/Insurance; Tax; Capital Markets and Financial Services.

In wake of Brexit, Luxembourg's Finance Minister promotes Luxembourg at 'Summer Davos' in China as premier centre for the internationalisation of the renminbi

Speaking at the Summer Davos WEF conference in Tianjin China today, Pierre Gramegna, the finance minister of Luxembourg, said "I do not want to use the Brexit situation to be particularly proactive, but obviously we are very pleased that many Chinese players have looked into Luxembourg and have chosen Luxembourg".

Sunday June 26th 2016:


Implications of the resignation of Jonathan Hill, EU Financial Services Commissioner

A measure of the disruption to EU financial services of the Brexit earthquake is the loss of the EU Financial Services Commissioner, Lord Jonathan Hill, whose resignation underlines the gravity of 'Brexit' to finance, London as a financial centre, and the EU's Capital Markets Union plan, which he enthusiastically initiated and promoted. A measure of the unfinished work, and the work he was engaged in up to last Thursday's vote, can be gained from reading his Twitter account, here

Even though Hill was an original eurosceptic, he came to appreciate that the possibilities of a broader European vision for the EU could hopefully be reconciled with the instincts of modern one nation Conservatism, as distinct from his colleagues Gove and Johnson. The possibility of that being tested, unfortunately, has been removed from him, and the EU and Ireland's IFS industry has lost a Commissioner who was seen by the industry to be more sympathetic and in tune with the possibilities of FS business and their clients than his precedessors in the job, going back, possibly, to former Commissioner Charlie McCreevy.

Speaking in Dublin, at the outset of the launch of the CMU project, in June 2015 he said that the period of post financial crisis regulatory growth in the EU had passed in his view, and that the number of submissions received from Irish bodies on the CMU was one of the largest from the 28 member states.

Saturday June 25th 2016:


Noonan pinpoints the preservation of the free labour market between Ireland and Britain as key priority, but warns "the more difficult area will be trade"

The Minister for Finance Michael Noonan pinpointed his priority objectives for dealing with Brexit, with the free labour market at the top of the list. In an RTE news interview on Friday 24th, he says that the key concern will be to ensure the preservation of the free labour market between Ireland and Britain. The second, "and more difficult area will be trade", and that will be complicated by a renewed impetus from his EU colleagues to reinforce a hard external border. "Our border, 60 kilometres north of Dublin, with the UK out, would be seen as an external border of the European Union and I think that is going to present a particular difficulty for us", he said.

"We would be very anxious to ensure that a number of things would happen; first of all the free travel area would be maintained between Ireland and the UK, and of course the free travel area leads on to the common labour market. In other words it is not enough to be able to go to London to see your aunt, (that) you can stay there and work there is the issue, and that is what has been happening since 1922".

"Our arrangements go back historically. They were put on a legal basis when the state was founded in 1922 and that was reinforced and reaffirmed when the Republic was declared in 1949, it was reaffirmed again with the Good FrIday Agreement, and they predate the entry of either the republic of ireland or the UK into the European Union. So there is the basis for an agreement there".

EU should react calmly, and with restraint to Brexit - FF leader Martin says.

The leader of the Republic of Ireland's Opposition, Fianna Fail leader Micheal Martin, said EU leaders should refrain from any instinct to give the UK 'a bloody nose' because of Brexit. The reponse should be calm, and understandable of the electorate's vote, he said. (He was speaking in an interview with RTE).

Friday June 24th 2016:


00.05 hrs Friday June 24th 2016: BREXIT - the unthinkable has happened - the implications for Ireland's finance, and Financial Services Industry

A Finance Dublin Survey on the effects of a 'Brexit' on the Irish IFS industry shows that 58 p.c. say it would be ‘bad’ for Ireland's international financial services industry although there are seen to be some potential compensating factors. On compensating factors, 53 p.c. say that compensating factors may offset the damage caused, against 47 p.c. saying that the net effect definitely would be negative. Fintech is one area where Ireland could gain from 'Brexit', as London could lose its pre-eminent status as one of the global fintech hubs as a result.

On the implications for Ireland's tax and FDI, see this Plan B to steady the ship on the corporate tax front after 'Brexit', from the latest Irish Tax Monitor. And, see this assessment of Financial Services Ireland Director Marc Coleman on the implications of Brexit for Ireland's IFS industry.

These articles are contained in the latest issue of Finance Dublin circulated ahead of the June 23rd UK referendum.

See this on the economic impact on Brexit on Ireland and the UK.

Posted: Friday June 24th 2016: Morgan Stanley's Colm Kelleher raises the possibility of moving EU HQ to 'either Frankfurt or Dublin' in the event of Brexit

RESOURCES



Matheson Brexit Forum
See: law firm Matheson's online Brexit Forum: Matheson Brexit Forum

Global and UK Markets Assessments

Exit the Brexit Discussion: What Investors Should Consider Next

Central Bank Governor Lane's statement to Central Bank of Ireland staff in the wake of Brexit

29th June 2016:Michael Metcalfe, head of macro strategy at State Street Global Markets considers five core markets issues: 1) Were the hedges high enough?; 2) Sterling's movements; 3) Ready for interest rate cuts?; 4) A reduced appetite for risk?; 5)Watch the “symptoms” not the system?

24 June 2016: Currency market movements - a short term indicator of the potential Brexit impact on the Irish and UK economies

Other Resources



5th June 2016: The Bank of England has introduced a significant change to its banking regulation, post Brexit - a reversal of its decision to increase the Counter Cyclical Capital Buffer in March 2017, and other changes to ease banks’ capital requirements by an estimated GBP5.7bn.

See our comment below:

Finance Dublin comment:

The changes are outlined in the Bank of England Financial Stability Report, July 2016, available on the bank's website. This move is a significant one, and underlines the potential future of a more independent UK central bank in global financial markets. Post financial crisis, banks globally have tightened their prudential requirements for banks, and this may be seen as a potential move by the Bank of England in the direction of a more independent bank regulatory policy.

It is an important input for banks researching their EU and eurozone single market passporting continuency plans post-Brexit.

29th June 2016: Corporate law firm McCann FitzGerald held a Brexit Symposium on 28th June 2016 in Dublin, part of a series Brexit events held by the law firm - see this report in Finance Dublin, February, of its pre-Brexit Symposium in Guildhall in the City of London. A summary guide to Irish corporate governance rules (applicable to regulated financial services firms and quoted corporates in the Republic of Ireland), authored by McCann FitzGerald partners David Byers and Paul Heffernan, has just been published in the Irish Chapter of The International Comparative Legal Guide to: Corporate Governance 2016 (published by Global Legal Group Ltd). It is a useful summary of the code as it applies to IFS companies.

23rd June 2016:Michael Mainelli founder of the widely referred to benchmark index of the standing of international centres, the GFCI. and adviser to the Irish Government on its 2020 international finance strategy has circulated this article, written in the closing hours of the Brexit referendum campaign.

Accountancy firm PwC prepared this assessment of the impact for Financial Services prior to the vote.

Editorial - June 2016 issue of Finance Dublin : The 'Brexit' Categoricals