Home Directory *IFSC Online Ltd Ireland’s international banking sector moves up EU and world rankings as a key strategic location for accessing Europe post Brexit

Ireland’s international banking sector moves up EU and world rankings as a key strategic location for accessing Europe post Brexit

75% of international banks in Ireland actively involved in their group’s implementation of sustainable finance and 56% see opportunity for Irish operations to take global leadership in this area

A new report into Ireland’s international banking sector shows Ireland is moving up the EU and world rankings standing at 17th largest international banking sector in the world and 8th largest in the EU in Q4 2020, up from 19th and 9th a year earlier. The report shows Brexit has been a key driver of change in the sector with the balance sheets of ECB/SSM* supervised banks jumping from €300 billion in 2015 to €500 billion as of July 2021 due to the expansion of international banks’ operations in Ireland post Brexit. According to the ECB, Ireland ranks second after Germany in terms of the size of value of assets moved into EU banks post Brexit.

The report, which examines the contribution of the International Banking community to the Irish economy has been published by Banking & Payments Federation Ireland (BPFI) in conjunction with its affiliate the Federation of International Banks in Ireland (FIBI).

Ireland’s international banks now serve as key hub for access to EU market post Brexit

Highlighting the key findings from the report, Fiona Gallagher, FIBI Chair and Chief Executive Officer of Wells Fargo Bank International, said: “Today’s report highlights the significant role and contribution the international banking sector makes to the Irish economy and how it has changed dramatically over the last five years. While Ireland’s international financial services sector has steadily grown over the decades, the UK’s exit from the EU has accelerated this trend, with Ireland now one of the key EU hubs for international banking and capital markets activity. Many UK and global banking groups built-up or established new Irish entities to service EU clients post-Brexit. This has seen an influx of new staff, assets, risk management capabilities and investment services activities in Ireland. In addition, EU branch networks have also been revised, for example by transferring EU branches of UK entities to their (new) EU entities in Ireland. International banking operations in Ireland are now acting as a key bridge to servicing the EU market, directly and through its vast EU branch networks”.

The report also details how a key factor to Ireland’s international financial services offering has been the significant growth of systemically important institutions (SIs) based out of Ireland, servicing the global and EU market. The ECB’s data shows that Ireland now ranks second in terms of banking relocations and in terms of the size of planned operations. In December 2015 the balance sheet size of Irish based SSM supervised entities was €300 billion, which in the interim has grown to €500 billion as of July 2021, which the report shows can be attributed to the operations of international banks expanding their bases here. Ireland’s international banks believe there is a global leadership opportunity for their Irish operation in sustainable finance.

The report identifies sustainable finance as a key driver of continued growth in the international banking sector in the coming decade and speaking on the opportunities this will present, Ms Gallagher said: “As we look to the future, the single greatest challenge is undoubtedly climate change and sustainable finance. A recent survey of our FIBI members showed that 75% are actively involved in their group’s implementation of sustainable finance and 56% of them see an opportunity for their operations here to take a global leadership role in this vital area. Our banks are well positioned to help businesses and customers transition to a low carbon economy and ensure that Ireland meets it climate targets. This transition offers great opportunities for the sector, which FIBI members are keen to develop. Our collective ambition is to make Ireland a key hub for sustainable finance over the coming decade, while supporting both our international and Irish clients.

Ms Gallagher concluded: “Ireland’s attractiveness as an open and stable economy has been critical to this recent success. It is now crucial that we remain a competitive jurisdiction in which to operate an international bank, particularly in a highly competitive post-Brexit environment. As we now look to the future, we are determined to work collaboratively with the Government in the development of its international financial services strategy so that Ireland remains a key EU financial centre.”

The report, Supporting Ireland’s Success – The Contribution of International Banking

* The ECB is responsible for the overall functioning of the Single Supervisory Mechanism. It directly oversees all 'significant' euro area banks which have assets of more than €30 billion or which account for at least 20% of their home country's GDP.

18/01/2022