Half of Central Bank's Brexit applications from asset managers

IDA Ireland has said asset managers account for about half of the 100-plus applications the Central Bank is dealing with from firms seeking authorisation in the State as a result of Brexit.

"A lot are in the investment, asset management space," Kieran Donoghue, head of international financial services at IDA told Reuters in an interview on Friday. "I'd say it could possibly be up to half.

“There will be a significant increase in activity in investment management ... building on Ireland’s reputation as a domicile for investment funds.”

Central Bank governor Philip Lane told members of the Oireachtas finance committee on Thursday that the regulator had received more than 100 Brexit-related applications for authorisation.

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"These include applications both for new legal entities and from existing entities seeking to extend their current authorisation," Prof Lane said. "The applicants intend to sell directly to Irish customers or sell from Ireland into the European Union.

“The potential activities [include] banks, investment firms, trading venues, electronic money institutions, commercial insurance and retail insurance,” the Central Bank governor said.

Wall Street giant Morgan Stanley, US investment group Legg Mason as well as UK-headquartered groups including Aberdeen Standard Investments and Baillie Gifford are among firms that have outlined plans to set up asset management units in Dublin to maintain access to investors in the EU after Brexit.

Mind and will

Industry sources have said firms seeking to set up asset management units in Ireland would typically employ 20-50 people to demonstrate that they have substantive operations and that the “mind and will” of the entities are in Ireland. These would mainly comprise staff in compliance and distribution, rather than actual portfolio managers.

More than €2.5 trillion of global fund assets are domiciled in Ireland in an industry that employs about 14,000 people.

Meanwhile, the executive director of European Securities and Markets Authority (Esma), Verena Ross, said at an event in Dublin on Friday that she wanted to avoid a situation where firms would create so-called letterbox entities for EU operations after Brexit.

Ms Ross also said that asset managers should prepare for market volatility as equity investors are showing more sensitivity to Brexit developments. EU president Donald Tusk has billed a European Council summit on October 18th as the "moment of truth" for negotiations. – Additional reporting, Bloomberg