Relocating firms to be ‘intrusively supervised’
FINANCIAL services companies looking to shift operations as a result of Brexit should expect “intrusive ongoing supervision” of their activities, regardless of their chosen location.
Dublin has been tipped as a potential contender to win investment displaced from London, as a result of the UK’s decision to pull out of the European Union, as it vies with a number of other European capitals, including Paris.
Central Bank deputy governor Sharon Donnery told a gathering at London’s Chatham House that Brexit will see some relocation of financial services companies to Ireland.
Regulation
But she warned that there needs to be a common approach across all European countries towards regulation, as capitals seek to carve up the Brexit spoils. “What is important is that regardless of where an entity seeks to relocate, firms should expect a rigorous assessment of the applicable regulatory standards and intrusive ongoing supervision of their activities,” Ms Donnery said. “Regulatory authorities in the EU operate as part of the European System of Financial Supervision (ESFS) and, as such, should apply European legislative requirements in a uniform manner.” Earlier this month, Ms Donnery’s colleague at the Central Bank, director of insurance supervision Sylvia Cronin, said 30 insurance firms have either expressed interest in setting up here in recent months due to Brexit, or sought authorisation.
It came just a day after US insurer AIG announced it was setting up an operation in Luxembourg, in a blow to Dublin’s post-Brexit ambitions.
The regulator here said five companies have sought authorisation as insurance or reinsurance undertakings since November, and another five have signalled a firm intention to do so.
A further 20 insurance entities have contacted the Central Bank to discuss authorisation.
Ms Donnery said yesterday that authorisation-related activity in Ireland has continued to increase including queries from banks, markets firms, queries regarding payments and electronic money, and insurance authorisations.
But she signalled few decisions to move have been made yet.
“To date, these have largely been exploratory. For example, in the case of Ireland, the semi-annual growth rate of the number of Irish resident investment funds since the UK referendum in June 2016 to December 2016 stood at 3.13pc,” Ms Donnery said.
“This is close to the longerterm trend seen since December 2012.
“This may serve as evidence that, to date, there have not been significant location spill over effects.
“In the main, firms are waiting until Article 50 is triggered before taking concrete decisions on activity and location.”
Ms Donnery told the gathering that although the shortterm risks of Brexit were overestimated by some, it was important not to underestimate the risks over the medium and longer term.