IDA told not to use Brexit to bring in risky business
Published 30/05/2016 | 02:30
The IDA has been warned not to chase finance services firms from Britain at any cost, if the UK votes to leave the European Union, by a key figure on the board that oversees the Central Bank.
Businesses should not be courted to come here, if they will not provide a real benefit to the economy, former ESRI chief and current member of the Central Bank governing commission, John Fitzgerald said.
Speaking at the Federation of International Banks in Ireland (FIBI) conference, Mr Fitzgerald, who is now a Trinity professor, urged the IDA to avoid companies that want to "re-domicile" in Ireland.
Mr Fitzgerald said he had no doubt that the IDA's "vultures" were circling the city of London.
"Significant parts of the international financial sector are very important to the Irish economy. They create jobs, bring in taxation, but there are significant parts that do nothing for Ireland.
"They bring nothing in terms of employment, nothing in terms of taxation, but we have to pay an additional EU contribution on as a result of their activity," he said.
"We should be selective and I'm concerned we're a little gung-ho in this area," Mr Fitzgerald said. In the wake of the banking crash the Central Bank's mandate was changed, ending a requirement on the regulator to promote the Irish financial services sector.
But bringing new business to Ireland remains an imperative for other agencies, notably the IDA.
In response to Mr Fitzgerald the IDA's head of international financial services, Kieran Donoghue, said the agency would not specifically look to attract high-risk investments. "We're not going to go into the marketplace and target high risk activities and bring them to the jurisdiction, because we have a duty of care to resisting investors to preserve the reputation of the jurisdiction.
"I think between the Department of Finance, Central Bank, ourselves, and also the risk managers that are sitting in the institutions that we are talking to will make the best possible investment," Mr Donoghue said.
The potential impact of a Brexit was a major theme for the international bank executives attending the event in Dublin.
FIBI chairman and JP Morgan Ireland chief financial officer Jonathon Lowey said Ireland needs to level the playing field when it came to how regulation is interpreted here in comparison to other competing jurisdictions.
"The banking landscape is evolving all the time. But, as international banks with operations here in Ireland, our over-riding objective remains the same: namely, to maintain our existing business lines as well as win new business from competitors and, more significantly, internally within our own organisations," the FIBI chairman said.
In a reference to so-called "gold plating" of European Union law, Mr Lowey said Ireland needs to interpret regulation in the same way here as it is in competing jurisdictions, in order for cost competitiveness to be maintained.
Mr Fitzgerald spoke in a personal capacity at the banking event, but his comments echo a recent speech by Central Bank governor Philip Lane.
Last week, at a separate banking conference, Mr Lane said regulators plan to step up oversight of some types of off-shore assets based in Ireland, regardless of whether they pose a direct risk to the economy here.