Veneto Banca liquidates wholesale banking arm in Ireland

Veneto Banca, the troubled Italian lender which is in the process of requesting state aid to secure its future, has liquidated its Irish wholesale banking operation, Veneto Ireland Financial Services.

The move comes as Dublin ups its efforts to compete with Paris and Frankfurt and attract more financial services companies looking to relocate from post-Brexit London to remain in the European single market.

According to a spokesman for the bank, the decision to close the Dublin branch came about as a result of the group’s rationalisation of its foreign subsidiaries. The bank’s Irish branch, which closed to business in March 2016, before being liquidated in March of this year, reported operating income of some €5 million for the Irish branch as of year-end 2016, largely due to the sale of its securities portfolio (€6 million) down from €47 million in the same period in 2015. The bank had assets of €435.6 million at year-end 2016.

Veneto’s main activity was engaging in a range of financial transactions, and supporting the group in implementing its financial strategies. Based in Commerzbank House in the IFSC, it employed fewer than 10 people,

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Veneto Banca was bailed out by the Italian government in 2016, when a private vehicle sponsored by the government took ownership of it. It has subsequently applied for an injection of public money, a so-called “precautionary recapitalisation” by the state, a scheme already being used by troubled bank Monte dei Paschi di Siena.

The rescued lenders may seek as much as €3.3 billion of state funds, but the European Commission must first approve its restructuring plan, which includes a possible merger with another regional lender, Banca Popolare di Vicenza.

Foreign banking

The closure of Veneto is the latest in the line of foreign owned banks – many of which ran into trouble during the financial crisis – that have opted to bring their foreign business back home. German banks in particular, including DZ Bank, Commerzbank and Sachsen, have retrenched their Irish operations against a background of increased scrutiny of lower tax jurisdictions such as Ireland in the German media.

Formerly one of the larger banking players in Dublin, Depfa Bank, the Dublin-based lender rescued by German authorities during the financial crisis, continues to wind down its Dublin operation. Its most recent financial accounts showed that assets fell by 25 per cent to €27.6 billion in 2016 as the bank’s focus remains “exclusively” on the execution of its wind-down.

At the same time, Dublin is hoping to win big with banks and insurers looking for a new home when the UK departs the single market. Already Barclays Bank has confirmed it will expand in Ireland, while there has been speculation that others, including JP Morgan, Morgan Stanley and Bank of America will also add to their existing operations here.