UK-based firms seeking Irish authorisation, says Central Bank

Central Bank deputy governor Cyril Roux has said "several" UK-based firms have started the application process to be authorised in Ireland in the wake of UK's Brexit vote.

Mr Roux insisted the regulator was open to approving financial companies that will have a meaningful presence in the State and denied recent media reports that it does not want investment banks moving activities to Dublin from London.

“Since the UK referendum, there has been a material increase in the number of authorisation queries from UK-authorised entities,” Mr Roux told the Institute of International and European Affairs on Thursday.

“Many of these engagements have been preliminary in nature. But several have moved into the pre-application or application phase, and this is likely to continue in the coming months as UK firms prepare for the possibility of a loss of passporting rights into the EU.”

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Reuters reported last week that the Central Bank had signalled to several large investment banks considering a move from London after the UK leaves the EU that it would be reluctant to host large trading operations.

However, Mr Roux said the regulator has adopted no such position.

“Such applicants, of course, like any other applicant, can expect a rigorous process where we will expect to understand clearly the risks inherent in the business and how they are managed and mitigated.”

Mr Roux said the Irish financial services sector could grow “to a significant extent” as a result of the UK exiting the EU and that the Central Bank was “committed to meeting the challenge”.

Reservations

Meanwhile, the deputy governor said the bank would highlight its reservations, before an upcoming meeting of the Oireachtas finance committee, about a Fianna Fáil Bill aimed at giving the regulators powers to limit variable mortgage rates.

“In a nutshell, we believe that the Bill would conflict and interfere with our monetary and prudential mandates, while having counterproductive effects for borrowers,” he said.

The European Central Bank was more explicit when it gave its views last month on the Bill, saying it would further hit competition and could force banks to push up the cost of other types of loans. ECB president Mario Draghi went so far as to say it would lead to a number of unintended consequences and damage the credibility of the entire euro system.

Mr Roux also observed that the Central Bank had no role to play in capping general insurance premiums as motor coverage providers, dealing with large losses in recent years as a result of a surge in claims levels, push their rising costs on to customers. The latest Central Statistics Office data shows that insurance premiums have surged almost 56 per cent in the three years to October.

The Central Bank has pressed insurers to set aside additional reserves in recent years, against the backdrop of rising claims.

“We oversaw a combined increase in the solvency capital of insurers in this sector in the past few years,” he said. “As a result, all Irish insurers have remained solvent and open for business.”

By contrast, Malta-based Setanta Insurance and Gibraltar-based Enterprise Insurance, both of which sold products in Ireland, have collapsed in the past two years.