Ireland’s new biggest bank: How Barclays rose to the top

The arrival of Italian banker Francesco Ceccato in Dublin last autumn to head up Barclays Bank Ireland could not have been more low-key, occurring in the middle of the coronavirus pandemic.

“Starting this role during Covid-19 has presented some challenges,” says the 51-year-old chief executive, who’s taken up residence in an apartment in an eerily quiet city centre – up to recently at least – where normal social gatherings, among Dublin’s community of financial executives remain off the agenda.

“I’m lucky that I was able to make some good connections in Dublin well before the pandemic, especially among banks,” says Ceccato, who previously served as co-head of Barclay’s European business advising financial services groups. “I’m looking forward to seeing them again in person as soon as possible.”

Assets

Barclays Bank Ireland, known internally as Barclays Europe since the British banking group picked the unit as its main European Union banking entity in 2018 as it prepared for Brexit, became the largest bank in the State last year as tens of billions of euros of assets were transferred to Dublin. The Irish unit’s balance sheet more than doubled in 2020 to just shy of €135 billion - knocking Bank of Ireland, with assets of €134 billion, off the top spot.

The winners and losers of the pandemic

---

Top 1000 2021: Apple remains Ireland’s largest company

---

Doing deals during the pandemic

---

“It was a huge undertaking, but has been extremely successful,” says Ceccato. “Establishing the entity in Ireland and expanding our presence here has also presented more opportunities for senior roles to be based in Dublin.”

Dublin has emerged as the most popular choice for UK banks, insurers and asset managers to move activities since the Brexit referendum in 2016, with 36 out of 222 top financial services firms monitored by EY having confirmed or said they are considering the Irish capital. These include: nine universal banks, investment banks and brokerages, including TD Securities and Bank of America and Numis Securities; 18 wealth and asset managers, ranging from Legal & General and Morgan Stanley to Legg Mason; and six insurers or insurance brokers, such as Standard Life, XL Reinsurance and Beazley.

Luxembourg holds second place, at 29, with Frankfurt coming in third, at 23, and Paris, fourth, at 14. However, Dublin ranks third in job announcements, at 1,200 - less than half of those that have been shifting to Paris and some 500 fewer than Frankfurt.

Bank of America established the Republic as the hub of its EU banking arm in 2018, merging its existing Irish unit - inherited from its rescue takeover of Merrill Lynch a decade earlier - with its London arm to create a bank with €50 billion of assets. Still, the unit is far off its heyday, when Merrill Lynch International Bank in Dublin had $593 billion (€488 billion) of assets, by far the largest bank in the State, before it moved a massive derivatives book to the UK in the first half of the last decade.

Overseas

Citigroup, one of the first major overseas banks to enter the State when it set up a base on Dawson Street in 1965, had, by good fortune, established its Irish unit as its main European arm months before the Brexit vote. The group employs about 2,500 in the Republic. Citibank Europe chief executive Cecilia Ronan signaled in an interview in April that she sees further growth in the unit in the coming years as more business transfers from London.

“Brexit has contributed to the expansion of the financial services landscape in Ireland which is now recognised as an emerging financial centre within and beyond Europe. Many financial services firms have had operations in Ireland since the 1980s so it made sense for them to leverage their well-established Irish entities in their strategic response to Brexit,” says Fidelma Clarke, EY Ireland’s financial services Brexit lead.

Peter Oakes, a former Central Bank enforcement director and founder of Fintech Ireland, which reports the country’s financial technology scene, says that some firms that have delayed making Brexit moves are increasingly looking at Dublin.

“Companies that moved activities in 2019 or 2020 are now part of the narrative, and offer an example, when you are talking to firms still considering their options,” he said. “We’re going to see a divergence between the UK and EU on financial services laws and regulations over time. If you want to be in both jurisdictions, you’ll have to staff up entities in both. What stands in Ireland’s favour for many financial institutions is that it’s a common law jurisdiction, as opposed to the codified law you see on the continent, which is piecemeal at best.”

But it hasn’t been one-way traffic. A number of European banks that set up operations in the International Financial Services Centre (IFSC) in the 1990s - including DZ Bank, Helaba and Commerzbank - have handed back their Irish licences since the financial crisis as their parents seek to release capital that is “trapped” in various subsidiaries and streamline their own organisations.

Italian financial services giant UniCredit confirmed in May it is to close its IFSC operation after more than quarter of a century and transfer its operations and €12.9 billion balance sheet back to Milan.

Economy

Meanwhile, a slew of overseas lenders into the domestic Irish economy, including Danske Bank, Bank of Scotland and Rabobank, have retrenched from the retail market since the financial crisis.

Ulster Bank and KBC Bank Ireland have also signaled in recent months that they plan to exit the Republic as the level of expensive capital Irish lenders must hold against loans, a legacy of the crash, has made it more difficult to generate acceptable returns for their head offices. The remaining three high-street banks, Bank of Ireland, AIB and Permanent TSB, are in talks to buy parts of the departing banks’ assets. Bank of Ireland chief executive Francesca McDonagh is hoping to conclude a deal to acquire KBC Ireland’s €9 billion of performing loans by early 2022.

Barclays Bank Ireland’s time as the largest bank in the State could prove short lived.