Financial Services Minister concerned over battle for Brexit banks

Financial Services Minister Eoghan Murphy has raised his “very serious concerns” about the behaviour of other EU countries over their bids to lure institutions from London after Brexit, writes Eamon Quinn.

At a meeting in Brussels early this month, the Minister voiced his concerns with Commission vice-president Valdis Dombrovskis that other jurisdictions were over-promising as they attempted to persuade insurance companies, in particular, to set up offices in their jurisdictions, a spokesman for the Minister said.

The concerns do not amount to an official complaint to the Commission, but the Minister wanted to stress the need for some sort of clarity over regulations in case rival jurisdictions were not able to deliver the required levels of oversight and Ireland would lose out, his spokesman said.

The Government is battling many other financial centres across the EU to attract banks and insurance companies that will need to have a base inside the EU if the UK were to abandon the single market and fail to strike some sort of special deal for the City of London.

Regulators here have long stressed they are not interested in attracting so-called brass-plate operations and will require insurance companies to commit to establishing substantial operations.

Amid a standard approach to regulating banks across the eurozone, there is little or no scope for rival countries to promise banks special deals. Insurance companies, however, do not face the same level of scrutiny.

The Minister’s verbal complaint may mark growing concern that Ireland may not persuade as many insurers to relocate here than first thought. Last week, insurance giant AIG confirmed it had opted for Luxembourg as its base, as it prepares for Brexit.

In an interview with Reuters, Minister Murphy said that “other cities in Europe are being very aggressive in trying to win business,”, describing what he called “dangerous competition”.

“We have always said ... we would not be predatory ... that we are not interested in brass plating,” he said, referring to the practice of setting up a token operation with a brass-plate sign outside in order to gain market access.

Separately, the head of supervision for lenders at the Central Bank, Ed Sibley, has said that assessing applications for banks to move here “would have significant resource implications and challenges” for the regulator.

The comments were reported in the minutes of a Central Bank Commission meeting at the end of January which were released by the Central Bank yesterday.

There was good news yesterday for the prospects for Ireland attracting Bank of America. The bank views Dublin as its default destination for a new hub inside the EU if Brexit means the UK loses easy access to the single market, according to one of the firm’s top executives in Germany, Bloomberg reported.

The bank will likely move some jobs to other cities across the EU, including Frankfurt, Madrid, Luxembourg and Amsterdam, Nikolaus Naerger said at a press briefing hosted by the Association of Foreign Banks in Germany.

The firm hasn’t made a final decision on Dublin and could choose a different destination, said Mr Naerger, Bank of America’s head of corporate banking in Germany, Switzerland and Austria.

This story first appeared in the Irish Examiner.

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