Inside the world of business

Brave IFSC plan will have to counter reputational damage

IT IS tempting to dismiss the Government’s latest plan for growth and employment – its strategy for the IFSC – as yet another glossy wheeze that will lead to very little.

The plan is indeed ambitious, foreseeing 10,000 new jobs within five years, as the IFSC expands in exciting areas such as shared services, international payment services and centralised insurance operations.

It may all be gobbledegook to the rest of us but the value of such activities and jobs should not be knocked. As the strategy points out, for example, the non-life insurance IFSC market employs about 1,000 staff at the moment and contributes an annual €200 million in corporation tax. It goes on to helpfully note that this amounts to €200,000 per employee.

The difficulty of course is in replicating this kind of high-value model in the future of the IFSC, while retaining the more everyday roles that occupy much of the time of the 33,000 workers who beaver away in the sector every day.

Fund administration has traditionally been the biggie here, employing many thousands in minding and administering international investment funds. This business has been hugely successful in Ireland, but less fruit has been borne from efforts to attract in the more sophisticated, less labour-intensive fund management operations that were initially targeted for the IFSC. The latest strategy announces plans to again go after this business and the arguments for it – building on a platform etc – are strong enough.

Standing against it, however, is the obvious problem – the lack of international credibility that continues to rain down upon us as a result of the bailout and general sovereign debt chaos.

At least the plan, drawn up with the help of industry veterans such as Willie Slattery of State Street and old-hand advisers such as Pat Wall of PwC, recognises this. It points to “reputational damage” and also, helpfully, highlights the impact of our high personal tax rates on the ability to attract good people in this very mobile industry.

All in all, it’s not going to be easy for the IFSC, and wouldn’t be so even if the goal was simply to retain what is already there. The latest strategy is constructive, however, and Enda Kenny has promised us all that it will all work out. We want, very much, to believe him.

Whatever you feel about Nama, it is constitutional

IT IS no surprise that both Paddy McKillen and Nama emerged from the Supreme Court yesterday claiming to have won the day.

The beauty of legal proceedings is that, unless someone is actually being led away to prison, anyone involved can argue that, in fact, they were the winners, even if they were not.

This is even more true with something like the McKillen case, as it raised a number of points, all of which the courts had to address, and it was always likely that they would come down in favour of some and against others, giving both sides something to point at as evidence for victory.

However, it is true that Nama got something very important out of the whole proceeding. The Supreme Court ruled that the agency and its activities are constitutional.

If the ruling had gone the other way, it would have , in one observer’s words, “holed Nama below the waterline”. The whole process would have been sunk and all the development loans would have to have been returned to the banks.

The Supreme Court’s word on such matters is final. This means that no one else can challenge Nama’s constitutionality, at least not on the same grounds as McKillen.

Nama is understandably happy with that aspect of the court’s ruling.

The agency is right to congratulate itself on successfully defending the legislation’s constitutionality.

But there is one other challenge on the way, from developer David Daly, so this would not be a good time for the agency to rest on its legal laurels.

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