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A vibrant finance sector Back  
The Irish international financial sector has shown an active pulse according to the Finance Dublin Yearbook survey of IFS companies, which attests to the great contribution of the financial services sector to the economy.

The financial services sector proves its innovation and ingenuity in its development of sophisticated products and strategies for the consumer in the area of foreign exchange risk management and wealth management.
The continued strong growth of employment in finance, as revealed in the Finance Dublin Yearbook survey (page 1) is testimony to the continued positive contribution to the economy of a vibrant and innovative financial services sector. Recent upward revisions to the UK’s GDP data have been occasioned by evidence of a greater than expected contribution to UK GDP of the financial services industry in the UK in the past five years, where estimates now put the expansion in the UK’s industry at more than a third. Were such data to be available for Ireland, it is likely a similar pattern would be revealed for the Irish economy.

A vibrant finance sector depends, in part on the availability of ever more advanced skills. Our report on page one indicates some of those skills in short supply, and it is clear, for both potential entrants to the sector and employers that development and investment in these areas will pay dividends in years to come.

Another spinoff from a more vibrant finance sector is the growth and sophistication of product delivery in private finance, now generally termed wealth management. In recent years, most delivery in this sector, as indicated by Eamonn Glancy of Goodbody Stockbrokers in his article has leveraged off the emphasis on property related investment of the Irish client, but it is important too to assess the range of services available related to other assets. Risk management is central to wealth management, and the age old investment principle that diversification is central to risk reduction applies today as much as ever. Diversification involves a broad minded approach to investment options and product delivery, and thus the increased sophistication of wealth management services to encompass debt instruments, and their interesting investment potentials, hedge funds (which in theory should mean what they say), and indeed equity and equity derivatives all should play a part in a sophisticated approach to wealth management.

Risk management also is a theme of our articles on foreign exchange risk management in this issue. It is currently a challenging time for corporate treasurers, as rising interest rates (occasioned by a global uptick in inflation, which has even now reached the shores of Japan) as well as the usual fears about political stability make for a more uncertain markets environment than at any time since 2003.

Back on the theme of maintaining a vibrant finance sector, several articles in this issue also remind us of the need for continued vigilance on the part of our regulators and policymakers. Brendan Sheridan of Deloitte indicates that the final direction of the long drawn out implementation of FRS17 is now pointing in the direction of full recognition of pension liabilities, and this indicates that corporate finance directors will need to be vigilant on this front in their reporting.

On the taxation side, Brian Daly of KPMG draws our attention to a trend whereby the European Court of Justice and the EU appear to be travelling in opposite directions – with the Court’s decisions this year coming down on the side of favouring tax competition, while the Commission is pursuing a tax harmonisation agenda.
Tax competition, and regulatory competition (subject to sensible pan European directives and regulatory and taxation initiatives) is the way forward for the EU, and Ireland’s financial services industry. Therefore on this one we are with the Court.

Another topics that receives an airing in this issue is the question of ‘gold plating’ in EU regulation, where Sinead O’Loghlin and Tom Carney of Dillon Eustace write (page 7) about the principles that should apply in Ireland to the granting or withholding of authorisation to applicants by the Financial Regulator. An avoidance of gold plating in Ireland would also be a positive feature of our financial services agenda going forward, and should come into consideration in the current policy review for financial services underway at Government level.

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