| Does the IFSC model need changing? |
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| New and radical thinking and ideas are required to continue to develop international financial services in Ireland - but the reward could be global recognition and top ranking as a global financial centre, says Padraig Rushe. Rushe, who is chairman of the Banking & Treasury sub group of the Taoiseach's Clearing House Committee says that a decision has been taken to dedicate the September meeting of the committee to a strategic debate on the IFSC Banking and Treasury sector. |
The inaugural Global Financial Services Centres Conference was a timely event held in one of the most turbulent times for the financial services industry. An indication that the significance and importance of global financial services centres may be exercising minds elsewhere as well as in Ireland is clear when one reviews the delegate listing. Representatives from such places as The Ontario International Marketing Centre; Bahrain Financial Services Development; Toronto Financial Services Alliance; Holland Financial Centre and the BVI Government were present as well as journalists from the Jersey Evening Post and Finanzplatz-Frankfurt and representatives from Isle of Man, Guernsey, London and across Europe.
I doubt if a conference like this was held at a time when the IFSC was in its early stages that such a broad spectrum of jurisdictions and businesses would be represented. Equally revealing was the Irish representation which confirmed that the IFSC is no longer a Dublin Docklands phenomenon as Shannon Development, Carlow Co Council, Belfast Harbour Commission, Invest Northern Ireland and others were all present.
For the IFSC itself it is clear that over the past year or so the market environment has been transformed and that going forward new and radical thinking and ideas will be required if we are to continue to develop international financial services here. Indeed there is a growing realisation that in some areas the business models on which the IFSC has been grounded may now be redundant.
This very point was recently ventilated at the IFSC Banking and Treasury Group and a decision has been taken to dedicate the September meeting to a strategic debate on the IFSC Banking and Treasury sector.
Partnership potential
Reverting to the conference we were made aware of the growing emergence of new financial centres in places like Mumbai; Shanghai and Dubai and the potential that in the future they may well challenge such well established centres as Hong Kong and Singapore. For the present at least it is also manifestly evident that while oil prices continue their upward spiral the global wealth will shift eastwards. Equally though, and from a financial services perspective, we can expect that some of that wealth will re-emerge in the West (this is evident already via some of the investments made by large Sovereign Wealth Funds (SWFs) and our challenge is to seek to capture as much of the resultant spin-off financial activity as possible here in our financial services industry.
There are two key areas that I believe we need to review as a means to an end here. The first is our infrastructure. Within this I include all aspects of our physical infrastructure as well as quality of life, education, taxation, regulation, languages, skills, competitiveness, etc. We need to urgently address areas where weaknesses are evident, but also leverage our strengths to best advantage be they in Dublin, Carlow, Limerick, Belfast or elsewhere. It would be easy to pick off problems that need to be remedied but I think it would be far more useful and constructive if we developed an attitude and intent to simply put Ireland at the top of the competitiveness ladder and in so doing all issues of significance ought to be addressed.
The second area which needs to be reviewed, and coupled with the first, is our geographical location. Ireland is still the only English speaking country in the Eurozone and occupies the ‘gateway’ between East and West. We now have an established reputation internationally in the financial services sector. We have a well respected and trusted regulatory environment and a stable political environment. Rather than view some of these emerging centres as competition maybe we should see them as potential partners in this ever changing environment. When the IFSC model was being developed some expected that Dublin might emerge as the back office for some of the London-based financial institutions. Since then we have developed some superb front and back-office skills sets here in financial engineering, actuarial and other specialist areas in the banking, asset financing, investment management and insurance sectors. We are now well positioned (subject to my infrastructure comments above) to attract more and more of these skills based businesses and executives to Ireland, and in so doing develop the capability to offer both front and back office solutions to some of these new emerging centres and jurisdictions.
The conference identified that we have a developing consensus within this island on the importance and potential of the financial services sector. It also reminded us that there is a global recognition of the considerable success we have enjoyed since the IFSC commenced activities in 1987. Surely it is not too fanciful to expect that Ireland might well become one of the top ranked global financial services centres in another decade or so. |
Padraig Rushe is director at Bank of Ireland Corporate Banking, and chairman of the IFSC Banking & Treasury Group.
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| Article appeared in the August 2008 issue.
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