Monday 12 December 2016 12:01 am

How Dublin is quietly winning over financial hearts in the Brexit battle

Ever since June’s surprise vote to leave the EU, London’s crown as a financial leader in Europe has been under increasing amounts of pressure.

The German financial capital of Frankfurt has so far proven a powerful contender, with senior ministers reporting an increase in firms applying for licences and top politicians for the region being sent on missions to New York to woo bank’s decision makers.

Paris has gone on the charm offensive as well, with a campaign urging London’s financial firms if they are “tired of the fog” to “try the frogs”.

But there’s another quieter city that could scrape away at London’s financial ranking. Although perhaps less vocal than others, Dublin is ideally placed to pick up parts of businesses that need moving following Brexit.

The Irish city has been reported to be less interested in the big banks, possibly as it is still dealing with the hangover of the financial crisis. However, as it is already a hub for asset and wealth managers, Dublin is primed to take in any parts of these businesses that need a new EU home.

“There is no doubt that Dublin will benefit from a portion of the UK’s €1 trillion fund business that is likely to repatriate to Dublin and other EU centres,” said Gina Miller, who, although arguably better known these days for challenging the Article 50 process in the courts, is a founding partner of SCM Direct.

Firms are already eyeing up a shift. For example, Prudential’s M&G confirmed at its interim results over the summer that it would seriously consider expanding its Dublin base, as well as taking a closer look at Luxembourg, to make sure it could continue to serve EU clients once the UK is no longer a member state.

Bats Europe’s chief executive Mark Hemsley has also said his firm is looking into setting up a new base in the EU to keep business as usual following Brexit, and, thanks to its similar legal framework and labour laws, Dublin is a strong contender.

In a speech at the start of this month, Central Bank of Ireland deputy governor Cyril Roux said he had seen a notable increase in the number of authorisation queries from firms setup in the UK.

“Many of these engagements have been preliminary in nature,” Roux said. “But several have moved into the pre-application or application phase, and this is likely to continue in the coming months as UK firms prepare for the possibility of a loss of passporting rights into the EU.”

Miller also told City A.M. she had been told by a source at the Irish regulator that they had seen a significant number of enquiries from businesses looking to reshuffle their funds into Dublin after Brexit.

Aberdeen Asset Management chief executive Martin Gilbert told City A.M. that asset managers were among the least affected by Brexit. However, he added, for those parts of the business that did need to be reconsidered, the choice of where to expand to was clear; Luxembourg or Dublin.

“My view is for long-only funds you go to Luxembourg, for more complex products you tend to go to Dublin,” Gilbert said.

However, Dublin is not without its faults and will need to do some work to fend off the likes of Luxembourg. The city’s infrastructure is not as strong as it could be, and some have questioned whether the country has the capacity to deal with a sudden influx of business and staff.

Gilbert noted that, when it came to expanding Aberdeen going forward, his own business would tend to favour Luxembourg.

“I’d rather visit Dublin than Luxembourg, but Luxembourg’s a better place to market funds into the Frances, Germanys, Italys, Spains of this world than Dublin,” he added.

Meanwhile, the House of Lords EU Select Committee has today published a report urging those involved in the upcoming Brexit negotiations to be careful not to unintentionally undermine efforts to forge strong relations between the Republic of Ireland and Northern Ireland.

In particular, the peers call on the UK and Irish governments to pull together a draft bilateral agreement ahead of the final EU Brexit deal being signed.