Friday 23 February 2018

'Tough regulation' blamed as Lloyd's rejects Irish move

Lloyd’s chief executive Inga Beale. Photo: AFP/Getty Images
Lloyd’s chief executive Inga Beale. Photo: AFP/Getty Images

Colm Kelpie and Donal O'Donovan

A tougher stance taken by the Central Bank has been blamed as a key reason why companies will not relocate here in the wake of Brexit.

Insurance giant Lloyd's of London will today pick Brussels or Luxembourg over early favourite Dublin for its European Union base, according to informed sources.

That's despite a huge political drive involving Taoiseach Enda Kenny to bring Lloyd's here.

High personal tax rates and even the lack of top restaurants are being blamed, along with a stricter stance taken by the watchdog.

Crucially, regulators in Brussels and Luxembourg are reported to have shown more flexibility than Ireland on issues including the amount of capital that Lloyd's needs to keep in its new EU base.

Having to keep less capital in a unit makes it cheaper for companies to have multiple headquarters.

The Central Bank yesterday declined to comment, but Governor professor Philip Lane said it had adopted a consistent position in relation to Brexit-related supervisory queries.

"Our regulatory approach is in line with sound practices being agreed across Europe; our responsibility is to ensure that firms authorised to operate from Ireland demonstrate compliance with EU requirements," he said in a speech in London.

Prof Lane is known to be wary of firms locating small parts of their business inside the EU, while remaining largely UK-based.

"To this end, we seek to ensure that an entity will be substantively run from Ireland and that the set-up permits effective supervision, with local management accountable for decision making.

"From a supervisory perspective, it is simply not sustainable to entertain proposals that fall short of these basic requirements."

However, Irish politicians had made a concerted effort to get Lloyd's to come here.

In January Mr Kenny met the Lloyd's chief executive Inga Beale (pictured) at the World Economic Forum in Davos, Switzerland.

Lloyd's followed up with a delegation to Dublin that met IDA chief executive Martin Shanahan and separately met Mr Kenny on January 26.

Lloyd's also met with officials from the Central Bank, including Sylvia Cronin, director of insurance, on the same day.

It is believed that factors influencing the decision by Lloyd's include tax, regulation, proximity to clients, as well as staff-related issues such as the presence of international schools and good restaurants.

If that proves correct, it will be the latest blow to Dublin's post-Brexit ambitions, after US insurer AIG announced earlier this month it was opening an operation in Luxembourg to write business across the European Economic Area and Switzerland.

Yesterday, Financial Services Minister Eoghan Murphy said Ireland had a very strong offering and extensive work had been done to promote that offering.

"Not every decision will go our way - there will be an ebb and flow to this, and I think the flow to Ireland will be strong from decisions that have already been made in our favour," he said.

The regulator here has said five companies have sought authorisation as insurance or reinsurance undertakings since November, and another five have signalled a firm intention to do so.

A further 20 insurance entities have contacted the Central Bank to discuss authorisation.

Irish Independent

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