By Paul Hannon
Ireland's central bank has received "several" applications from banks seeking to relocate from London in the wake of the U.K.'s June 23 vote to leave the European Union, and expects to see a "significant" expansion of the country's financial services sector as a consequence, a top official said Thursday.
Dublin is among a number of European cities seeking to woo firms considering a move away from London to maintain their access to EU markets, and faces competition from Paris, Frankfurt, Berlin and Luxembourg, among others.
"Since the U.K. referendum, there has been a material increase in the number of authorization queries from U.K.-authorized entities," said Cyril Roux, deputy governor at the Central bank of Ireland. "Many of these engagements have been preliminary in nature. But several have moved into the pre-application or application phase, and this is likely to continue in the coming months as U.K. firms prepare for the possibility of a loss of passporting rights into the EU."
With Ireland still recovering from an economic crisis that was in part a consequence of excessive borrowing and lending by its banks, there are worries about boosting the financial sector. In the aftermath of the global financial crisis, taxpayers provided a bailout to banks totaling EUR64 billion, one of the largest in the world relative to the size of the economy.
But Mr. Roux denied speculation that the central bank would reject applications from firms seeking to set up riskier trading and investment banking operations.
"It has been said that the central bank does not want to see investment banking or trading in Dublin," he said in a speech. "I want to be clear: we do not have such a position. We have not sought to dissuade any such entities from seeking authorization nor are we planning to do so."
The central bank official also said that he will only approve applications from firms that intend to have a "substantive presence" in Ireland, ruling out the possibility that banks could claim a legal presence in the country while continuing to do most of their business in London.
"Outsourcing and insourcing are acceptable -- up to a point," he said. "One may outsource activities, but one may not outsource responsibility."
While a movement of businesses to the country from the U.K. would be a boost to Ireland's economy, the government fears that growth will slow over coming years if the U.K.'s departure from the EU results in a rise in barriers to trade. The U.K. accounts for 16% of total Irish exports, but that figure rises to 40% if firms operating in Ireland but based elsewhere are excluded. Many of the "indigenous" businesses that are heavily reliant on U.K. sales are in the tourism and agriculture sectors.
Write to Paul Hannon at email@example.com
(END) Dow Jones Newswires
December 01, 2016 11:03 ET (16:03 GMT)
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