Talks with insurers looking to leave UK 'hardening'
London-based finance houses will start taking decisions about relocating, potentially to Ireland, in the first half of next year, according to the Central Bank. An increasing number of global insurers are "considering seeking a new authorisation in Ireland, particularly to locate their headquarters for European business in Ireland rather than the UK", the Central Bank said in its annual Macro Financial Review.
The Review, launched by Deputy Governor Sharon Donnery, includes the clearest signal yet from the Regulator that Brexit is having a definite effect on the financial services landscape. Overall, the Central Bank thinks the UK decision to leave the European Union poses more risks than benefits to Ireland.
But, according to the bank's director of credit institutions Ed Sibley, discussions with insurers considering a new authorisation in Ireland are becoming more concrete, after earlier "fact- finding" inquiries.
Under EU passporting rules financial service firms can trade through the union from a single location but UK firms fear losing that access.
Yesterday, the Financial Times said Dublin was on a short-list of destinations that could house insurance market Lloyd's of London new European offices.
The iconic insurance market is synonymous with the London financial district, but is exploring the viability of five European locations, including Dublin, to house part of its operations to after Brexit.
In its Review of the economy, the Central Bank warns that Ireland's economy faces "downside risks" due to the country's vulnerability to domestic and external shocks, high public and private debt, as well as Brexit.
It also warns that any future problems in IFSC-type funds activity could pose a reputational risk to Ireland even though the direct risks to the economy are minor - a factor likely to also be true of any step up in the level of international financial services activity post-Brexit.
The Central Bank said that it expects growth for this year to hit 4.5pc slowing to 3.5pc in 2017, which is in line with forecasts from other agencies.