This is about collaboration, and positioning Ireland as the intermediary/gateway to Europe, said the most recent past chairman of FIBI in an interview with Finance Dublin. “This logic applies equally to our corporate clients and even more so to our multi-national corporate and institutional third country clients. Ireland is the perfect conduit to Europe, from the UK and elsewhere. This is our greatest strength.” Combined with a young, highly educated and highly skilled workforce Irish based International Financial Services firms can continue to offer valuable access to Europe which will be all the more crucial as the longer term implications of Brexit become clearer, he said.
"This is not about short term cannibalizing of the city of London which in my view will remain one of the great financial centers in the world".
The process that might have begun earlier, post Brexit, has been delayed by the pandemic.
“In fairness the last 12 this has been fully around pandemic response scenarios. Staff safety and well-being and ensuring existing clients had everything they needed to get through and survive the initial economic shock. It was also important to ensure that where we could, we contributed and assisted in the Communities in which we operate as in some cases the pandemic pain was much more acute in these areas. Brexit took a back seat for a while”. However we are now beginning to see increases in activity that are Brexit related. We need to bear in mind that this will be a very long process of re-calibration for our clients and indeed within Financial services itself, he said.
Regarding the impacts of Brexit he said “it is actually difficult to fully assess the implications of Brexit on capital markets at this time as so much remains fluid. Any equivalence based arrangement, by its nature is built on trust and sadly that seems to be fairly thin on the ground for now at least. Clearly the whole point of Brexit was to not be bound by rules made in Brussels. Therefore as we move forward divergence is inevitable it would seem. This will cause difficulties.
Irish financial services firms and industry groups are in an almost unique position to help. This is not about short term cannibalizing of the city of London which in my view will remain one of the great financial centers in the world. However Ireland is the only English speaking eurozone member with a Common law legal code very akin to that of the UK.
Pandemic response
International banks based in Ireland played a vital role in transmitting liquidity to the domestic economy, either directly through balance sheet lending or as the initial panic subsided by enabling access to capital markets for corporate and institutional clients. “Critically, banks such as BNP Paribas were instrumental in ensuring that Governments all across the eurozone, including Ireland, could efficiently fund the emergency measures required to meet the unprecedented challenge wrought by the pandemic. In addition our fund administration companies processed exponential increases in transaction volumes for institutional clients with activity doubling and indeed trebling as global asset managers and hedge funds responded to the initial market shock. This was exceptionally challenging all the more so in a remote working environment. Operational risk was extremely high during this time but thanks to the phenomenal dedication of teams across the sector all clients, corporate, institutional and sovereign were able to access the liquidity they needed, whether directly, via Letters of Credit and guarantees or indeed, via the capital markets. This incredible effort, ensured that a health crisis did not become a financial or economic crisis which would cause lasting damage. Finally, it is worth noting that at all times employment levels in financial services remained stable with every sign now pointing to an increase in employment above pre-pandemic levels as we hopefully leave the Covid crisis behind us”.
Asked whether he is optimistic that corporate banking will be able to continue to play such as supportive role in the context, e.g. of Brexit trends, and efforts in Europe to progress European Capital Markets Union and consolidate the single banking market, particularly in the eurozone he said: “I regret the British decision to exit the European Union but I respect that this was their decision. Now, where we can, all the more so, with our shared history, our land border, and our cultural affinity, we in Irish financial services should be offering help and access to our UK based colleagues. The message should be “How can we help?”. From a European perspective there are multiple challenges ahead, notably in trying to progress Capital Markets Union and European Banking Union. Both of these are critical to the successful evolution of the single market, in my view and to a closer economic union. Ireland has a crucial role to play in both of these topics and the charge is being led by our EU Financial Services Commissioner Mairead McGuinness and our Finance Minister Pascal Donohoe as President of the Euro group.”
“I know my colleagues across EMEA are always genuinely keen to hear the Irish view on these topics as despite our small size we are seen as a sophisticated and knowledgeable player with a balanced view point. This is even more so the case on Brexit matters for obvious reasons. We therefore have the means to influence the debate in a direction, which is to the benefit of all our clients.”
“When I look at the uniqueness of the offering from an Irish based International Financial Services perspective I cannot be anything other than bullish on our prospects. In addition it would be remiss not to mention the tireless work of the IDA, the ongoing enthusiastic support of the Government and Department of Finance and of course the Industry Advisory Group channeling strategy and priorities via the Ireland for Finance 2025 vision.
“International Financial Services have long been a key contributor to the Irish Exchequer, accounting for approximately 25% of Corporate Tax receipts in 2019 and directly employing almost 50,000 people. Clearly this contribution was amplified in 2020 during the pandemic when financial services continued to operate at full tilt.