The National Treasury Management Agency is highlighting to Irish bond investors that the country could seize opportunities, particularly in the financial sector, from a Brexit, even if the overall impact would be negative.
“Following UK exit, some activity in London may be forced to move within the EU in order to properly service the single market,” the NTMA said in an investor presentation published on its website on Wednesday. “Dublin would be an obvious choice for relocation [of financial services].”
The NTMA cites estimates that Ireland could attract some €6 billion of foreign direct investment should the UK leave the EU.
However, it said the amount of relocated activity would depend heavily on the outcome of EU trade discussions with the UK in the event of the country’s voters deciding in a referendum next month to leave the union.
The State is targeting banks including Standard Chartered and Royal Bank of Scotland as it seeks to lure finance jobs in the event of the UK option to exit the EU, Bloomberg News reported last week. IDA Ireland has pitched to UK and international lenders about relocating hundreds of traders and support staff, according to the report.
The UK votes on June 23rd on whether to remain part of the EU. London’s financiers have warned a so-called Brexit vote will prompt overseas banks to move jobs elsewhere, because some financial products can’t be traded outside the EU without specific agreements.
Banks that have moved some operations to Ireland include Credit Suisse, which said in December that it will make Dublin its primary hub for servicing hedge funds in Europe and move staff from London. Citigroup also moved last year to simplify the legal structure of its banking operations in Europe under the umbrella of its Citigroup Europe unit in Dublin.
Still, the NTMA presentation says that trade between Ireland and its nearest trading partner would be negatively impacted by a Brexit, hitting employment. Traditional migration of people from Ireland the UK “in times of stress” may also be impacted by such a scenario, it said.
Small- to medium-sized businesses, particularly agri-food and tourism would “likely be more affected than larger companies by the introduction of tariffs and barriers to trade,” it said.
