Regulatory mistakes will cost Ireland big time, says international bank boss

GETTING its financial regulatory regime wrong will cost Ireland thousands of jobs and billions of euro in tax and economic growth, according to the Federation of International Banks in Ireland (FIBI).

The federation’s chairman, Neil Ward, said all bankers accept that increased regulation is an inevitable consequence of the recent global financial crisis. Mr Ward, who is the managing director of Bank of Montreal Ireland, said much of the new regulation is welcomed by his industry.

“It will restore the public’s confidence in financial institutions and set boundaries that will decrease the chances of mistakes being repeated by the global financial services industry,” he said at the FIBI annual lunch.

However, Mr Ward said along with acceptance also comes the fear of over-regulation.

“As a country and as an industry we cannot afford to get the regulatory balance wrong. Remember 25,000 direct jobs are at stake, as are the positive spin-offs such as spend in the economy, taxes to the Government and so on,” he cautioned.

Mr Ward said the financial services industry is fragmented in Ireland, the risks, the ownership structure and the capital levels of many of the FIBI banks are substantively different from those of the domestic sector.

“A ‘one size fits all’ regulatory structure, particularly when it comes to corporate governance, is not without its risks and its unintended consequences. Does an FIBI bank that is 100% owned by its parent, with staffing levels in the tens or hundreds and with very little systemic risk to Ireland require the same corporate governance structure as a domestic bank that has thousands of shareholders, employees and depositors?” he asked.

Mr Ward said IFSC businesses are well situated and eager to play an important role in the future economic growth of Ireland.

“We are currently researching views across senior sector executives and the preliminary results to date provide some grounds for optimism. Almost 40% of respondents expect business activity to increase this year, while some 30% expect to increase employee numbers,” he revealed.

Former taoiseach and chairman designate of IFSC Ireland, John Bruton, said the criticism of the EU that has the greatest validity is that it waited for foreseeable problems to become acute before tackling them.

“Rigorous foresight of what might go wrong was missing. We must not make the same mistake again in different circumstances,” he said.