The British arm of Credit Suisse has advised big hedge fund and asset management clients that it may switch some its European operations to Dublin from the City of London.
The bank is understood to have entered extensive talks with clients of its “Prime Services” business division about the steps required to relocate certain activities from the City. The talks are at a sensitive point and no definitive decision has been taken to move to Dublin.
Credit Suisse has publicly acknowledged its interest in Dublin but say its main operation would stay in London. Not all parts of the “Prime Services” unit would move, it is understood.
“While the largest and most important centre for our European business will remain in London, Credit Suisse views Dublin as an attractive location for some business functions and support services and is currently assessing the possibilities available,” a Credit Suisse spokesman said.
“We think there could be significant benefits to clients in creating new state-of-the-art platforms in Dublin.”
Pressure on costs
Credit Suisse, which has been seeking to establish how clients would respond to such a development, sees potential to take advantage of lower costs in Dublin as increased regulation puts pressure on business costs in the City.
Sources in the financial community said the bank has been talking with institutional clients about the approach they would adopt in any move to Dublin.
The “Prime Services” business carries out execution and custody operations for hedge funds and asset managers, looking after the securities they hold and executing tax and dividend payments.
All matters arising are under discussion, among them detailed procedural and documentation questions. Also at issue is the question of which activities actually switch to Dublin.
“What part of that moves to Dublin and what stays in London is the question,” said a source in the financial sector. “What makes sense? What no longer makes sense?”
The possibility of moving support or back-office operations to Dublin is also under consideration. At issue are clearing, settlement, IT and financial support functions.
Credit Suisse has been quietly involved in discussions with the Irish authorities for some time. The organisation has sought regulatory approval from the Central Bank to carry out certain activities in Dublin but such approval has not yet been granted. The precise nature of authorisation sought remains unclear.
Contingency plan
Some observers in Dublin believe the move under discussion might form part of a contingency plan to deal with any British exit from the EU in the event that the mooted referendum is passed.
This assessment, however, was dismissed by senior financial sources, who insisted that the question of Britain’s EU membership was not driving the discussion in any way. “The main driver is the changed regulatory environment,” a source said.
Tougher regulation meant banks had to keep more capital against assets they held. The requirement for higher leverage ratios compelled banks to rethink how they carry out their business.
In that scenario, Dublin was perceived to offer advantage and efficiencies in respect of real estate and other corporate costs and the availability of “talent” in the workforce.
Credit Suisse’s “Prime Fund Services” unit had a presence in Dublin but it was sold last year to BNP Paribas Securities Services. The deal is expected to close this year.
