Dublin, Paris or Frankfurt? Post Brexit, where next for Financial Services Jobs?

By Adrian Marples, Client Partner, Alternatives Elect

 

Barely a day has gone by since Brexit without further debate about the likely destination of thousands of financial services jobs which will supposedly exit London in the coming years. If this were to happen then how geared up is Dublin, and what kind of jobs could find their way to Ireland?

 

As a former City of London head-hunter arriving in Ireland in 2014 it took me some time to understand the dynamics of the IFSC (the International Financial Services Centre), an expanse of land either side of the Liffey containing the offices of global banks, funds, insurance and reinsurance companies, some staffed with barely a dozen people, as well as a plethora of other professional services firms who advise them.

 

A large proportion of IFSC jobs can be labelled as back office, namely operational roles for fund administrators or custodians. As one industry contact told me when I made the move, “there are a lot of asset management businesses but few fund managers”.

 

Established to some fanfare by Charles Haughey in 1987, the IFSC was successful enough to place Dublin 10th on a list of financial services centres in 2009. By 2014, the same list placed Dublin 70th with seemingly one-way traffic out of the city.

 

The news has improved since those bleak days with Credit Suisse’s transfer to Dublin of their European Prime Brokerage business from London earlier this year being a flagship example that life is on the up. The previous government was certainly keen to capitalize on the opportunities for Dublin with a well-publicized plan in 2015 to create a further 10,000 jobs, to add to the 35,000-plus already employed, by 2020. Now, with Brexit on the horizon, the urgency to secure any strategic repositioning of jobs has significantly ramped up.

 

OPPORTUNITIES 

Where are the opportunities outside further back office jobs? Aidan Brady, the former CEO of Citi, suggested that the IFSC can become a hub for digital banking as well as a shared service centre offering expertise around governance issues, such as fraud.

 

Technology and digital banking is certainly an obvious fit, especially given the strength of Ireland’s eco-system; the testimony to another success story with Ireland the home to many blue-chip and emerging tech brands. There is also merit in considering Dublin as a centre for roles across risk and compliance, particularly those that do not necessarily need daily face time with revenue generating functions. Less likely to be considered are wholesale moves to lift large trading or investment banking divisions. Credit Suisse is likely to be an exception in this regard, and even it transferred many of their traders directly from London as opposed to hiring locally.

 

DRAWBACKS

What about the drawbacks? Commercial and residential real estate is expensive and hard to come by, especially when contemplating large scale moves, although the situation is improving with developments across Dublin such as the NAMA funded docklands programme. Personal income tax is high and likely to turn off those with upper-quartile compensation. Finally, there are concerns regarding the regulatory landscape with some international banks asking privately if the regime under the CBI is worth the hassle. That all said, Dublin has the location, talent, eco-system and much of the infrastructure required to take roles further up the value chain should London lose its passporting status.

 

WHERE ARE WE NOW?

So, where does this leave us? My London contacts and former colleagues suggest that, despite the headlines, international financial services firms are in no rush to make hasty decisions about leaving the UK. Too much uncertainty surrounds not only the tortuous Brexit negotiations, but also the wider regulatory agenda which will only make life more painful for many financial services firms during the coming years.

Can we expect a raft of moves to Dublin or are the headlines about the job moves just a lot of hot air? I suspect that the answer is somewhere in between…..