Irish Central Bank Deputy Governor Ed Sibley warned that many financial firms remain unprepared for Britain’s exit from the European Union as the two sides remain at odds on their future relationship.
Officials in Brussels say Prime Minister Theresa May is trying to cherry pick the best bits of single-market membership and won’t be allowed to opt in and out of different regulations. They also insist that the U.K. can’t expect mutual recognition of rules, which is May’s plan to protect the City of London.
“There’s a full spectrum of preparedness,” Sibley, responsible for leading the supervision of credit institutions, insurance firms and fund managers, said in an interview. “From the get-go, we have some firms who have been very comprehensive in working on contingencies. And we’ve had some who have their heads in the sand.”
Ireland is viewed as a favored destination for financial firms based in Britain that want to retain “passporting” rights, which allow them to do business within the EU, along with cities such as Frankfurt and Paris. Bank of America Corp. chose Dublin as its main EU base, while JPMorgan Chase & Co. bought an office block across the River Liffey from the central bank that could hold about 1,000 people.
The regulator is “seeing a very significant step up in the level of applications we have compared with a normal year,” said Sibley, who also is a member of the supervisory board of the Single Supervisory Mechanism, which oversees Europe’s banks. “Some firms have come a long way down the road and are getting close to the end, others are closer to the beginning.”
“We see a high degree of interest in potential relocations across all sectors,” according to Sibley. “Brexit-related authorizations still dominate a lot of our work.”
The risk of regulatory arbitrage between jurisdictions had “significantly decreased,” with Ireland influential in the decisions taken on supervisory stances, particularly on Brexit-related issues, according to minutes of the central bank commission meeting on January 26.