Banking sector to grow as Brexit exodus enquiries ramp up
Brexit is likely to lead to a rebalancing of the profile of the Irish banking sector, with an increase in operations and its overall size, the Central Bank said.
An internal report from the bank's Brexit Task Force, published by the regulator, noted that engagement with firms potentially looking to shift or set up operations here had levelled off ahead of the summer months. But it said the intensity of the interaction with international firms that had already expressed interest in moving here had substantially ramped up.
There has also been a rise in the number of banks looking to engage on the potential establishment of investment firms in Ireland, the documents stated.
"Based on engagements to date and depending on actual applications received, it is likely that there will be a rebalancing of the profile of the Irish banking sector, with a more even split between the total size of banking assets broken down by international wholesale banking activities versus domestic retail focused banking activities," the bank noted.
The Brexit Task Force is made up of representatives from divisions across the bank, and reports to the Central Bank Commission on a quarterly basis. The bank's chief economist, Gabriel Fagan, said yesterday that the probability of a very severe Brexit can't be ruled out.
He also said there could be knock-on effects that haven't been thought of. "What will the legal basis be of contracts in a post-Brexit EU for international contracts?" he asked.
"There are some people who are saying maybe Irish law will become the basis, just like Delaware law is the basis for a lot of US financial law. If that were to become the case, then it would have some very big implications for the legal system in Ireland.
"The legal profession in Ireland would become somewhat more prosperous. There are many such issues, things that you haven't thought about, about the implications."
Meanwhile, the bank has fractionally upgraded its growth forecast for this year and next, to 4.9pc and 3.9pc respectively.