No new banks or credit institutions were authorised during 2018, figures from the Central Bank show, while just six insurers got approval from the regulator during the year.
The low level of new business approved by the regulator contrasts sharply with the expectation that Dublin stands to benefit significantly from the UK’s decision to leave the European Union, although the Central Bank has said it has a strong pipeline of more than 100 applications, and it is expected that a number of these will be approved before the end of March.
Central Bank governor Philip Lane said last November the pending applications included “some very big operations and more bread-and-butter operations”.
Earlier this month, the IDA asserted that Ireland had won more than 55 Brexit-related investments, with the potential to create some 4,500 new jobs. However, data provided by the Central Bank shows that in the financial services space at least, the flow of new financial firms last year was low.
On the banking front, no new licences were authorised last year, while there were also no revocations of existing licences. However, the Central Bank said a “number” of applications submitted during 2018 were under review, while it has also carried out work assessing “material expansion proposals” from existing licensed institutions.
It is the latter that have seen most activity in Ireland since the Brexit vote in June 2016, with a host of incumbent players, including Barclays Bank, Bank of America and JP Morgan, all significantly broadening their scope in Ireland. Barclays, for example, is set to transfer business worth about €250 billion to Ireland in the coming months as it moves its non-UK European business to Dublin, creating 200 extra jobs at its new offices on Molesworth Street.
Its expansion will mean that, when looked at by assets, Barclays will be Ireland's biggest bank, more than double the size of either AIB or Bank of Ireland.
Insurance
The insurance sector was also relatively quiet. Six insurers were authorised by the Central Bank during 2018, while 13 had their licences revoked, including Quinn Life Direct, New Technology Insurance and Deutsche Post Insurance.
While there were no big-name transfers, there have been some smaller moves. UK-based North P&I Club, a marine mutual liability insurer, set up an Irish subsidiary, North of England P&I, last year to ensure that it maintains access to passporting across the EU. This is expected to underwrite all future EEA business of North and Sunderland Marine from February 20th. UK health insurer Bupa, also received authorisation for its Irish operation, to ensure it can continue its relationships with customers in the EEA, while US insurer Fidelis has also set up an Irish operation, again Brexit-related, on Dublin's School House Lane, led by Colm Lyons, formerly of XL Catlin.
In another Brexit move, Aviva created a new company to which it switched its Irish policyholders, but this is more of an administrative move, rather than a business-expansion one.
Funds boom
Much of the Brexit-related activity seems to be on the funds side, with a host of international fund managers either domiciling their funds in Ireland, or establishing MiFID (Markets in Financial Instruments Directive) investment firms, or UCITS/AIFM (Alternative Investment Fund Manager) management companies to oversee them. However, many of these will result in muted new job growth.
On the MiFID front, Scottish funds group Aberdeen Standard followed through with its plans to establish an investment and distribution business in Dublin, which will oversee its European branches. While the global asset manager already has a presence in Dublin, it received authorisation in December for the new unit which is set to employ up to 20 people.
A number of international funds players are also seizing the moment to either scale up their Dublin-based UCITS management companies or to establish new ones.
Consider the example of US funds group Legg Mason. The potential fallout from Brexit led the firm, which has had funds domiciled in Dublin since 1997, to open a dedicated management office here last year, to oversee its Irish fund range and allow it "flexibility to serve clients". It has taken space at the One Ballsbridge development, with six employees currently employed, with room to grow to 12.
Other UK fund managers, such as Marshall Wace, one of the UK's biggest hedge funds, are also in the process of beefing up their Irish operations. Marshall Wace currently has a presence in Ireland but has no employees here; however, this might change following its successful application for a UCITS management company and AIFM licences. Hermes Investment Management, another UK fund manager, also received a management licence during the year, as did Legal & General Investment Management.
