On a road trip to present the IFSC abroad, John Bruton put on a muscular show, writes DEREK SCALLY
FROM WIGS to guns, everything is for sale on Frankfurt’s Kaiserstrasse. Behind the European Central Bank skyscraper, the five-star Frankfurter Hof hotel is where the Irish treasury once sold off sovereign debt to bankers at breakfast meetings.
In the same wood-panelled room yesterday, hotel staff hurried to prepare another breakfast briefing, with the same croissants, bread rolls, cheese, jam and butter. “Kerrygold butter,” remarks a waiter as he retreats. “At least the Irish will always have that to sell.”
With Ireland on an EU-IMF drip and our bonds off the market, something more valuable was up for sale yesterday: Ireland’s reputation. The salesman is John Bruton, former taoiseach and EU ambassador to the US, now president of the Irish Financial Services Centre (IFSC).
Facing his Frankfurt audience – men from Deutsche Bank and JP Morgan in wire-rimmed glasses and tailored outfits – Bruton cuts an endearing if shambolic figure with an ill-fitting pinstripe suit and a nervous giggle.
In a short talk, he praises German prudence and EU solidarity before getting down to the hard sell of the Irish economy in general, and the IFSC in particular.
In gritting their teeth, taking pay cuts and accepting the need to pay off foreign bank debt, Irish taxpayers had shown “tremendous patriotism”.
By agreeing to shoulder the bank debt burden, the Irish people had prevented a wider banking crisis, he said, a solidarity that deserved recognition in Europe
“While the Irish banks lent foolishly, many lent foolishly to Irish banks considering the reliance on . . . the construction sector, which the rating agencies had warned about,” he said.
“A new government will be looking for a rebalancing of the burden while recognising the principal burden as our own.”
The next government would resist attempts to force an increase in Ireland’s corporate tax rate, he said, describing as “radically destructive” and “disadvantageous to peripheral countries” current EU proposals to modify consolidated tax base rules.
Bruton added that any new government was unlikely to burn senior bondholders, many of whom were sitting in the room.
“Our success as an international business location depends on us being seen as people of our word,” he said.
With a nod to the nearby ECB tower, he said Irish banks should be given time to sell off their assets. “If we have to have a fire sale of assets to recapitalise our banks, we could find that it is a self-defeating exercise.”
Few of the breakfasting bankers present wanted to see their names in a newspaper but most were confident about Ireland’s prospects.
Ireland’s reputation as a financial centre was far from ruined, said several attendees, and most German politicians were just as pragmatic about the need to assist Ireland and German self-interest in doing so.
“It’s right for Ireland to demand solidarity from other EU countries that earned a lot of money during its bubble,” said Michael Klimeck, an asset manager with operations in Dublin and Frankfurt.
“Irish corporate taxes are all fine and well,” said Kan Sumita, director of Metzler Asset Management, “but Ireland’s greatest attraction is its great people”.
One concern raised by several attendees was that the Irish Financial Regulator, once seen in Germany as light-touch, had now gone too far in the other direction.
“It’s too early to say for sure but I’m a little concerned that the corporate governance requirements are so onerous as to drive small entities out of the country,” said Sinéad Browne, chief operating officer of Allianz Re in Munich.
After the event, Bruton offered a philosophical take on the new culture of financial regulation in Ireland – and his mission for the IFSC to Frankfurt, London and Washington.
“If we have a harder sell with the IFSC, because we are no longer offering people things we perhaps shouldn’t have been offering in the first place, then so be it.”
