Current house shortages and house price increases will not prevent Ireland luring regulated UK-based banks and insurers who will need a home inside the EU after Brexit, Central Bank governor Philip Lane has said.
The “window is tight” to get infrastructure such as housing, schools and office accommodation in place but financial institutions will base their decisions on how quickly the “faults will be fixed”, Mr Lane said.
Speaking to reporters, he also expressed confidence the Central Bank’s controls over mortgage lending would prevent any future overheating of the housing market. There are many “brakes in the system”, he said.
The shortage of housing across Ireland has become a hot political debate over whether the country will attract a large share of the banking jobs that will likely shift out of London as the UK prepares to exit the EU.
But Mr Lane said no single EU centre will replace the City of London as EU cities compete by offering different advantages such as their housing, taxation and legal systems.
There had been fears that Ireland could lose out after insurers such as AIG and the Lloyd’s of London market opted to set up bases in other EU countries despite the large international insurance industry that is based here.
However, investment banking giant JPMorgan Chase has confirmed it plans to move hundreds of London-based bankers to expanded offices in Dublin, Frankfurt and Luxembourg to preserve easy access to the EU’s single market after Brexit.
“We will have to move hundreds of people in the short term to be ready for day one, when negotiations finish, and then we will look at the longer-term numbers,” said its head of investment banking, Daniel Pinto.
Global banks are preparing to move some London-based operations into new or expanded bases inside the EU after UK prime minister Theresa May began the formal process for exiting the bloc.
“We have to plan for a scenario where there is no UK-EU passporting deal, and we have to move a substantial portion of our business to continue serving our European clients,” said Mr Pinto. “We’ll have to wait to see what kind of deal can be achieved and see what we need to do from there.”
The firm’s EU investment banking operations will likely be based in Frankfurt, while custody will be located in Dublin and treasury services will be handled in Luxembourg, a source said. JPMorgan will initially move between 500 and 1,000 staff to the three cities and others in the region.
PwC’s Brexit business partner David McGee said there is at least a 75% chance of a hard Brexit and planning had to reflect that. Speaking in Cork, he said the continued row over the “divorce bill” between the EU and the UK, as well as the free movement of people and the complications of trade talks all pointed to a hard Brexit.
The question, Mr McGee said, was whether the risks posed by Brexit to the agri-food industry could be offset by opportunities in financial services and information technology. He said Cork was in prime position to take its place as a European leader in financial services and IT. Mr McGee said both Dublin and Cork had the “existing critical mass” to support financial technology and cyber firms who were looking to operate away from London.
© Irish Examiner Ltd. All rights reserved