Luxembourg gains on Dublin as most attractive location for financial services firms post-Brexit

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Dublin, Wednesday, 26 June 2019: Dublin remains the most popular choice for financial services firms to relocate post-Brexit, with 29 firms having committed to relocating staff or operations to the city since the UK Brexit Referendum, according to EY’s latest Financial Services Brexit Tracker. However, Luxembourg has closed the gap significantly over the last three months, attracting four more companies to a total of 23, just ahead of Frankfurt which has attracted 22 firms to date.

EY’s Brexit Tracker also found the number of jobs (7,000) and assets (€1.1 trillion) remained flat from the last quarter, reflecting that firms paused or slowed down their Brexit preparations once the extension to October was announced. It is likely that more firms will make final decisions when there is greater clarity over what is likely to transpire in October.

Commenting on the tracker, Cormac Kelly, Financial Services Brexit Lead for EY in Ireland said: “Whilst we have only seen one additional firm announce their intent to relocate to Dublin since our last tracker, we’re seeing that firms who have already made the decision to relocate to the city are ‘getting on with’, if not completing, their relocation and transfer to their new European location. Organisations across the Insurance, Banking and Asset Management sectors have gained their licence and are now actively establishing their new European operating models and resourcing their organisational structures. Specifically, firms are spending significant time and effort on understanding and adapting to the new European regulatory regime and building their ‘business as usual’ supervisory relationships with the Central Bank of Ireland and central European regulators.”

The quarterly tracker also shows that the direct financial impact of Brexit on major financial services firms has now reached nearly €4.5 billion. This sum includes a €1.5bn cost of relocating staff and operations, legal advice, contingency provisions, as well as an additional €2.9bn for capital injections to scale new non-UK headquarters. This spend has been a source of income for many firms, highlighting that even in the most disruptive of times, there are business opportunities. However, it is worth noting that only 13 out of the 222 firms monitored by tracker have put a figure on the direct financial impact of Brexit, meaning that the actual figure is likely to be higher.  

13 firms monitored by the EY Financial Services Brexit Tracker reported some financial detriment from Brexit, without quantifying the cost. These announcements covered share price falls, lower profits, dividend cuts, a slowdown in lending, loss of customers and reduced capital market activities. Another 20 firms have made public pronouncements on the impact of Brexit, without going into more detail. Amongst FinTech companies, fundraising challenges and deferred M&A were the most voiced financial concerns, alongside the potential loss of talent and access to the free market.

Meanwhile, 26 firms have spoken about Brexit having a positive impact on their business, with a further 12 firms flagging short term opportunities from the UK leaving the EU, mainly around benefitting from any market volatility.

Professor Neil Gibson, Chief Economist, EY Ireland said: “Disruption and uncertainty are always present for businesses, and our data shows that even when both are amplified, there are opportunities to be found. Concern over Brexit is inducing new spending and investment, as firms seek to prepare themselves, and this in turn is generating valuable revenue for other businesses. Ireland’s ability to attract an increased FDI inflow in 2018, its hugely impressive job growth figures, and the results of our tracker, indicate that we’re approaching these challenging headwinds from a solid footing.”

According to EY’s 2019 European Attractiveness Report, financial services investment into Europe increased by 23% in 2018, recording the highest total – 421 projects – in a decade; in part a reflection of the market’s fragmentation as firms looked to set up a second European HQ in advance of Brexit. Looking at Ireland specifically, the country attracted 32 FS FDI projects in 2018, versus 28 in the prior year.

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About the EY Financial Services Brexit Tracker

  • The EY Financial Services Brexit Tracker monitors the public statements made by 222 of the largest Financial Services firms with significant operations in the UK across universal banks, investment banks, brokerages, wealth and asset managers, retail banks, private equity houses, insurers and insurance brokers, and FinTechs.
  • The Tracker captures public statements made by these firms on key issues across sub-sectors relating to staffing, domicile, financial impact, policy asks, product changes, remuneration and opportunities.
  • As the Brexit Tracker only captures pronouncements of the largest Financial Services firms with significant operations in the UK, some companies which have made public pronouncements on Brexit are not included in the statistics as they are not contained within the sample.
  • The Brexit Tracker runs from 24 June 2016. For this press release, data is complete as of 31 May 2019.

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