Some financial firms in Britain looking for a base in the European Union after Brexit are expected to start applying for licenses in Dublin by early next year, Ireland’s financial services minister said on Friday.
The Irish capital, along with other financial centers in the EU such as Paris, Frankfurt and Luxembourg, are hoping that banks and other financial institutions in London will choose them as a European base once Britain leaves the bloc.
Irish financial services minister, Eoghan Murphy, said Dublin was already being approached by financial firms from London, and some have already held “pre-application” discussions for licenses with the Irish central bank.
“I would be surprised if we didn’t see applications getting underway towards the end of this year and very early next year,” Murphy told Reuters in an interview.
“Depending on the type of application made, it’s too soon to say exactly when people would start to relocate.”
He was in London to speak at an Irish Funds conference to bang the drum for Dublin’s financial sector.
Already home to 6,000 funds managing two trillion euros ($2.1 trillion) of assets, Dublin is vying with Luxembourg to become a potential outpost in the EU for Britain’s 5.7 trillion pound ($7 trillion) asset management industry after Brexit.
Insurers in Britain are also looking to the Irish capital as a base, another sector the city is familiar with, along with aviation finance.
“While we have existing strengths in key areas, and it would make sense to continue developing those areas of strengths, we are also looking at new areas to answer the needs we think people are going to have after the Brexit negotiations are concluded,” Murphy said.
“This isn’t about taking advantage of a difficulty that the UK is in, we are not seeking an opportunity here, but we do recognize that businesses will have needs as a result of Brexit and we are here to help manage those needs.”
Ireland, along with Berlin and other centers, is also courting the emerging fintech, or financial technology sector, where London has dominated in Europe.
“Everyone now has to have some engagement with fintech. That is a very attractive pull point for Ireland,” Murphy said.
Reuters reported this week that Ireland has signaled to several large investment banks that it would be reluctant to host large trading operations, which are seen as posing a big systemic risk to a small country that has already suffered from a major banking crisis.
Asked if Ireland would turn down a license application from a big bank, Murphy said, “We have had discussions with big banks and big banks are looking at Ireland.”
However, it would be up to Ireland’s “independent” and “well respected” central bank “to decide the level of risk they think is appropriate for the financial sector, and that’s the important role that they face.”
Ireland is seen by the funds sector as scoring well on the “3Ls” – flexible labor laws, overall legal system and location – but has less developed infrastructure and higher rents than in some rival financial centers in Europe.
Residential rents in Dublin are higher than Frankfurt and are rising fast, but are below Amsterdam and significantly lower than Paris.
“I find this really surprising actually when I read these pieces coming out of places like Luxembourg and Paris about infrastructure issues in Ireland,” Murphy said.
Plenty of new office space and transport links to a wider selection of suburbs will be opened up in time for when financial executives would actually move to Dublin in a year or two, Murphy said.
“If you just walk around Dublin what you’ll see is cranes.”
($1 = 0.9418 euros) ($1 = 0.8044 pounds) (Reporting by Huw Jones; editing by Susan Fenton)
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