Wednesday 13 December 2017

Banks fleeing Brexit will wait 'at least a year' for licence here - Noonan

Finance Minister Michael Noonan
Finance Minister Michael Noonan
Colm Kelpie

Colm Kelpie

International banks looking to locate operations here in the wake of Brexit could end up waiting for at least a year to get a licence, Finance Minister Michael Noonan has suggested.

Dublin has been tipped as a possible contender to attract financial services jobs displaced as a result of the Brexit vote.

The Central Bank, which accepts licence applications from firms looking to establish here, said it is ready to engage with new business looking to shift operations to Ireland.

Mr Noonan said the process of assessing a company may take "many months of engagement, discussion and back and forth on key issues before the application is completed".

"So measuring on this basis we can expect a time horizon of probably at least a year," he said, in response to a parliamentary question from Fianna Fáil TD Jack Chambers, on the process required for an international bank to acquire a licence here.

Competition has been growing among certain EU capitals looking to lure firms from London following the referendum result, with Paris, Frankfurt, Luxembourg and Dublin among the contenders.

The French government pledged within days of the Brexit result to make its tax regime for expatriates among the most favourable in Europe. The country's authorities are reportedly planning to simplify the process of registering financial companies, with officials accepting legal applications which are written in English.

Central Bank deputy governor Sharon Donnery has defended the regulator's authorisation process, saying it is not slower at processing authorisations for new financial firms than EU rivals.

Mr Noonan said the first phase in the authorisation process for a banking licence involves the potential applicant submitting a proposal to the Central Bank for review, which Dame Street will examine and then issue comments advising the applicant of any further information or clarifications required.

Should the proposal meet the required standard, the applicant will then submit a formal application for authorisation.

A decision will then ultimately be taken by either the European Central Bank, or the Central Bank in the case of so-called "third-country branches", as to whether to grant a banking licence.

"The total time for licensing will depend upon the quality of the proposal submitted by the applicant; the nature, scale and complexity of the proposed business model; the time taken by the applicant to respond to comments raised on each draft of the proposal and application; the quality of the responses received addressing all issues raised; any changes made by the applicant to its proposal during the authorisation process and the time taken by any relevant third parties to respond to queries in relation to the application," Mr Noonan said.

Gerry Cross, Central Bank's director of policy and risk, has stressed that when asked to authorise a firm in Ireland, the Central Bank will only give the green light to a business, or a line of a business, that will be run from Ireland.

He has said the regulator will want to ensure that the board and management of the business are located here, that officials in Dame Street will want to be satisfied that the "mind and will" of the entity are based in Ireland, and that decisions are being made from here.

Mr Cross has said the length of time for authorisation differs depending on the firm.

For funds licensing, the turnaround is a matter of days. Other areas could take months, he said. And he said just because a firm is already licensed in the UK doesn't mean it can simply be fast-tracked in Ireland.

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