International banks pulling out of IFSC

rodento

Banks heading away because of to much regulation

http://www.rte.ie/news/2013/0504/390367-aib-michael-somers/

The Deputy Chairman of Allied Irish Bank Dr Michael Somers has said he is dismayed to see major international banks pulling out of the International Financial Services Centre in Dublin.
He said that banks such as Goldman Sachs are pulling out because of heavy regulation.
Dr Somers said that the banks pulling out will not say why they are doing this publicly.


My guess is that this'd be a major blow to our prospects if its true

Cody Pomeray

who of significance is leaving aside from GS?

Because GS's side of the story doesn't say anything about regulation, and it would be interesting to establish that there is actually any pattern.

ardmacha

Whatever about the truth of this, at this point the international perception that banking regulation in Ireland has been tightened up is as likely to be of benefit to the reputation of the state as do it any harm.

_Kaiser_

rodento wrote: »

Banks heading away because of to much regulation

http://www.rte.ie/news/2013/0504/390367-aib-michael-somers/

The Deputy Chairman of Allied Irish Bank Dr Michael Somers has said he is dismayed to see major international banks pulling out of the International Financial Services Centre in Dublin.
He said that banks such as Goldman Sachs are pulling out because of heavy regulation.
Dr Somers said that the banks pulling out will not say why they are doing this publicly.


My guess is that this'd be a major blow to our prospects if its true

Is it just me or does that read like "we're getting out because Ireland is no longer the free-for-all it was in the good ole days" or if you prefer "we're taking the money and running" :mad:

Good loser

ardmacha wrote: »

Whatever about the truth of this, at this point the international perception that banking regulation in Ireland has been tightened up is as likely to be of benefit to the reputation of the state as do it any harm.

If Michael Somers is 'dismayed' I would take it seriously. Alarming.

hyperborean

One of the Old Boys worried that the other Old Boys are leaving, non news

Dob74

rodento wrote: »

Banks heading away because of to much regulation

http://www.rte.ie/news/2013/0504/390367-aib-michael-somers/

The Deputy Chairman of Allied Irish Bank Dr Michael Somers has said he is dismayed to see major international banks pulling out of the International Financial Services Centre in Dublin.
He said that banks such as Goldman Sachs are pulling out because of heavy regulation.
Dr Somers said that the banks pulling out will not say why they are doing this publicly.


My guess is that this'd be a major blow to our prospects if its true

Having heard the interview, it was the usual Banker standing up for Banker.
Sommers also had a moan about the cap on bankers pay. Something which George Lee didn't even tackle him on. All's he'd have to say is "how about the 60 billion thrown into the banking system?"
But being an irish journalist he was on bended knee to a Banker.

markpb

Do people criticising Sommers know who he is? He's not exactly a typical banker. He wasn't even a banker until a few months ago.

Cody Pomeray

Yes, Somers deserves respect for his CV alone, but he (and the OP, despite his thread title) hasn't established there is any pattern.

What other banks are leaving, and what is the link to regulation?

Manach

When Pat Rabitte claims that this is nothing to be concerned over and far to early to link to any one cause - then it starts to be a worry.

hyperborean

markpb wrote: »

Do people criticising Sommers know who he is? He's not exactly a typical banker. He wasn't even a banker until a few months ago.

He is an Old Boy, from a family of old boys (bernard somers), Bankers were not the only ones reaping during the credit bubble, Him and his ilk had a massive influence on the public - private partnerships for example, we now know as money tree's for the Old Boys,
He was knee deep in the shit, and stinks of vested interests

http://www.businessandfinance.ie/index.jsp?p=161&n=256&a=2140

read between the lines

Cody Pomeray

Michael Somers was not a banker in terms of private banking.

The only banks he was attached to were institutional (Central Bank, European Investment Bank) - slightly different kettle of fish there, horse.

His first senior banking appointment was very recent, as markpb said.

if you're criticizing Somers for having been a player in the Irish banking industry, you're off the mark.


Having said that, I still don't believe there is any evidence to demonstrate that Somers is correct here. GS just sold a dying hedgie and no longer needed a banking license. Maybe Somers knows something more... but what other banks is he talking about? what pattern?

Sand

Separately, Dr Somers said he is dismayed to see major international banks pulling out of the International Financial Services Centre in Dublin.
He said that banks such as Goldman Sachs are leaving because of heavy regulation.
The banks pulling out will not say why they are doing this publicly, but have told him privately they are leaving because of heavier financial regulation in Ireland, Dr Somers added.

Id find it quite unlikely that the decision makers in major international banks (the decision makers being in the US, London or increasingly Asia) even know who Dr Somers is (Foreign commentators regularly confuse Anglo Irish and Allied Irish Bank due to the similar acronym) let alone discuss their own business strategy with him.

If application of regulation is driving out certain banks, then that's a good news story. If their bank isn't able to withstand some mild scrutiny its clearly a huge risk for the Irish taxpayer so we don't want it.

hmmm

Cody Pomeray wrote: »

Having said that, I still don't believe there is any evidence to demonstrate that Somers is correct here. GS just sold a dying hedgie and no longer needed a banking license. Maybe Somers knows something more... but what other banks is he talking about? what pattern?

That's the trouble - banks don't come out publicly and say things like "too much regulation, we're off", they realise how bad that sounds so they'll claim they are pulling out for some other reason. Or maybe not even pulling out, maybe they'll shift a project to Luxemburg or Singapore instead of Dublin.

Regulation is a balance, there is no 100% perfect regulation. It's a valid debate to be having and hopefully the Government, the Regulator and the IFSC banks are having that debate. The fact that Somers has put it somewhat in the public arena is interesting, but it's a debate that is never going to happen in front of the public.

Cody Pomeray

hmmm wrote: »

That's the trouble - banks don't come out publicly and say things like "too much regulation, we're off", they realise how bad that sounds so they'll claim they are pulling out for some other reason.

Yes I accept that point fully.

But the fact is they did sell an unprofitable fund recently, a consequence of which was no longer needing a license.

Unprofitability is a very good reason for selling a fund.

And until such time as someone can name other banks that are handing their licenses back to the Central Bank, it's hard to establish whether there is anything to this story at all.

For one thing, there has been no regulatory change that I know of which should alter how investment banks operate in the IFSC. The only regulations of relevance might be the EU directive relating to disclosure on outward marketing of Irish UCITS (the GS fund was a UCITS too). I don't know how big a deal that is. But it's not an Irish regulation, it applies across the EU.

freeze4real

How as the regulating of the banking industries changed since the financial crisis.

In terms of employment I don't have a problem with the likes of GS going as they employ very little staff.

We need more of the likes of state street citco norther trust that employs loads of staff.

Cody Pomeray

Funnily enough, State Street... in Dublin... bought 'fleeing' Goldman Sachs' fund.

[Jackass]

The trade off between having major financial institutions having a small presence in the Irish market with having a properly regulated industry is a no brainer...

Would you rather they stay at the expense of regulation only to repeat the current crisis in 20 years?

Finance isn't tied to any physical location, and most of the worlds largest institutions will have dealings with Irish investments regardless of where their offices are located.

hmmm

Cody Pomeray wrote: »

For one thing, there has been no regulatory change that I know of which should alter how investment banks operate in the IFSC. The only regulations of relevance might be the EU directive relating to disclosure on outward marketing of Irish UCITS (the GS fund was a UCITS too). I don't know how big a deal that is. But it's not an Irish regulation, it applies across the EU.

The Regulations may be the same, but they can be applied differently by different regulators. The CBI introduced the PRISM guidelines recently, which can see multiple regulators appointed full time regulating individual financial institutions. This can be a heavy burden, particularly on management and financial staff.

Fines are also largely at the discretion of regulators. Banks would like to avoid bad publicity, so if a regulator in one country was crawling all over them and fining heavily for small infringements, they may prefer to locate elsewhere (I'm not saying that's happening here because I don't know, I'm just using it as an example as to how the same regulations can have different impacts in different countries).

Cody Pomeray

Yes I agree that the Regulator can, in theory, alter regulatory standards and the degree of monitoring or enforcement, but my point is that given that the departing GS fund was sold to another investment bank resident here, it's not clear that Somers has a point.

There's also no decipherable pattern. The only other significant IFSC casualty has been Commerzbank, which was massively loss-making and had to deleverage.

Can anybody name a profitable bank or fund Somers is suggesting are withdrawing, or are about to withdraw?

Tea drinker

Nice to see the decommissioning of the WMD's

My guess is that there possibly are a number of shell entities, (one man operations) that may have had a license, that have decided to pull the plug. But the economic loss to Ireland is negligible. As regards what GS sold to State Street, the underlying business remains in Ireland so again no loss to us. But of course the headline had to be attention grabbing.

Bigger operations like Commerzbank are in wind down because they are loss-making so what good is a lower corporate tax rate to them then or in the future if it remains loss-making? And even though it was a large operation in terms of the stated assets under management the fact is that there are only a few employed in places like that who get sophisticated, high paying jobs. The IFSC is a financial centre by name and an administration hub by practice. Majority of those employed down there, with no disrespect, are fund accountants. Not qualified accountants, just accountants by name. The process is basic accounts reconciliation. Again, no disrespect meant to that profession, just trying to clarify that the IFSC isn't where the hedge fund managers hangout. The IFSC is where they have farmed their back office too!

As regards Somers, he is trying to get the regulator to take it a bit easier on AIB, but rather then cry about how they are getting a hard time when none of us could care less, he claims it is effecting everyone else too!

But I have no doubt that the Regulator is making sure that every "i" is dotted and "t" crossed these days. Given how embarrassingly incompetent it has been proven to be in the past they are simply trying to prove something to someone. But at the end of the day it is just more optics, because that office was and still is way behind. The only thing that is saving them from more embarrassment is the fact that not a whole lot of new business is being done so the chances of something new slipping under their fogged up radar is small. And as regards old stories resurfacing or investigations being made public that shine more light on the incompetence, forget it, too embarrassing. All swept under the carpet now, or will be prolonged to the point that it will become a distant memory.

hyperborean

Cody Pomeray wrote: »

Having said that, I still don't believe there is any evidence to demonstrate that Somers is correct here. GS just sold a dying hedgie and no longer needed a banking license. Maybe Somers knows something more... but what other banks is he talking about? what pattern?

Somers is a player and has very strong links both now and in the past to the banking sector,

Elderfield is not having a go at him for the craic,
http://www.independent.ie/business/irish/elderfield-clashes-with-aibs-somers-on-cost-of-regulation-29255433.html

In what are likely to have been his last public comments before stepping down from the role within a matter of months, financial regulator Matthew Elderfield effectively launched a broadside against deputy AIB chairman Michael Somers
Strong regulation and an adequately resourced watchdog are essential if the "terrible costs" of the banking failure to taxpayers and society are not to be repeated, he warned.
Mr Somers, the former head of the National Treasury Management Agency, who's a government-appointed director to AIB, claimed last week that global banking giants such as Goldman Sachs are leaving the International Financial Services Centre in Dublin due to over-regulation.

Cody Pomeray

hyperborean wrote: »

Somers is a player and has very strong links both now and in the past to the banking sector,

Very strong links is a very vague term. It doesn't really say anything valuable.

Elderfield is not having a go at him for the craic,

Somers essentially criticized Elderfield's office.

Of course he's going to respond, I presume he has a pair of balls and functional grey matter.

hyperborean

Cody Pomeray wrote: »

Very strong links is a very vague term. It doesn't really say anything valuable.


Somers essentially criticized Elderfield's office.

Of course he's going to respond, I presume he has a pair of balls and functional grey matter.

Is your reply based on anything? The link I posted has a few paragraphs which if you bothered reading(3 minutes of your time) you would have seen the links to the banking sector.

Michael quickly climbed the ladder of the Irish public service, working his
way up the ranks as a civil servant in the Department of Finance. Given that
most of his previous experience had been in this department or the Central Bank,
the decision to appoint him as secretary to the Department of Defence in 1985
was met with surprise, and in some cases resistance, according to a senior civil
service source.
From there he was brought back to the Department of Finance in 1987 by
Charles Haughey and appointed secretary of the National Debt Management
division. Somers was chairman of the group that drafted the National Development
Plan from 1989-1993 and chairman of the European Community group that
established the European Bank for Reconstruction and Development (EBRD) for
which the French president awarded him Chevalier in the Légion d'Honneur.


He also served as a member of the Audit Committee of the European Investment
Bank until June 2000 and was chief executive of the EC Monetary Committee. His
other current positions include board member of the Irish Stock Exchange,
European Investment Bank, the Institute of Directors, St Vincent's Healthcare
Group and member of the council of the Dublin Chamber of Commerce.

And 20 years as head of the ntma,

[sarcasm/] your right, he doesnt and never had any relationship with the banking sector [sarcasm]

Cody Pomeray

hyperborean wrote: »

Is your reply based on anything? The link I posted has a few paragraphs which if you bothered reading(3 minutes of your time) you would have seen the links to the banking sector.

By very vague, I'm saying he's never held a senior role in a corporate bank before recently becoming a (non-executive) director of AIB.

It's not really clear what you're even saying... is there anything more to it than attacking his character?

hyperborean

Cody Pomeray wrote: »

By very vague, I'm saying he's never held a senior role in a corporate bank before recently becoming a (non-executive) director of AIB.

It's not really clear what you're even saying... is there anything more to it than attacking his character?

I was curious as to his motivation in questioning the level of regulation; questioning his motivations is not malicious, although your attempt to stymy that questioning by throwing the "your attacking his character" jibber jabber has given me pause it certainly wont prevent the obvious question.

What has he got to gain from lax regulations in the banking industry?

You paint him as some type of white knight, have you any proof that he is such a man?

hyperborean

To put it simply I would be wary of anyone in his position with his knowledge preaching less regulation in a sector that has proven it cant police itself, the lack of regulation in the banking sector nearly collapsed the EU...... and we are all paying for it now.

Banks and regulators failed,

Cody Pomeray

hyperborean wrote: »

You paint him as some type of white knight, have you any proof that he is such a man?

Really?

Where did I present Somers as a white knight? I think I said he has a commendable CV... hardly white Knight territory is it.

And if you read the thread you'll see I don't believe there is evidence for what Somers is alleging. I just think we should stick to a straight-forward analysis, and not indulge in character attacks.

That is, do Somers' comments stack up? That should be pretty straightforward to answer: If anyone knows of major banks leaving the IFSC (apart from GS selling its fund to another Irish resident bank, and Commerzbank getting into massive financial trouble) then they should name them.

Seems like the most reliable way of examining the veracity of this claim...

serfboard

I'll paraphrase what Somers said on the radio - the banking sector in Ireland is being subjected to excessive regulation.

Now who is the last person I heard on radio to say that? Oh yeah, Sean Fitzpatrick, right before Anglo crashed.

eire4

Hmmm Goldman Sacchs complaining about too much regulation. I guess they just don't like not being able to run amuck with nobody to reign them in. This bank is one of the most corrupt corporations in existance.

http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511