Furio Pietribiasi, CEO of Mediolanum International Funds Limited, explores Ireland's transformation from a financial services newcomer to a global powerhouse, attributing its success to strong regulation, post-Brexit opportunities and a thriving ecosystem.
Over 25 years ago, when we were establishing Mediolanum’s presence in Ireland, the country was considered the new kid on the block in relation to financial services. It was a country with a strong ecosystem, a clear and transparent taxation system and a can-do attitude.
Now, years later, Ireland has grown up significantly to rival even the biggest financial hubs worldwide as total assets in Irish domiciled funds reached a record high of circa €3.7 trillion in 2022. Ireland has become the EU’s largest ETF hub, and we have continued to be one of the world’s largest UCITS and alternative funds servicing jurisdictions.
There are many reasons for this growth and continued leadership, including the regulatory environment with transparent and clear rules, innovation, common law, talent and, of course, Brexit – all contributing to the success of Ireland’s financial services system.
Regulatory environmentThe regulatory environment in Ireland has been a substantial pillar behind the country’s success and absolutely not because the financial services industry is lightly regulated; on the contrary – there is substantive and experienced oversight in place by the Central Bank of Ireland, but the key is that the application and oversight of regulation are clear and transparent – no unwritten rules.
As the regulator for financial services, The Central Bank of Ireland (CBI) has done a great job at ensuring regulation remains transparent to the point where any asset manager entering the country knows what requirements and expectations are and has a clear journey ahead of them to get established.
One of the reasons for the CBI’s success is the experience built over many years. There are individuals working at the regulator that understand how businesses operate and, importantly, how fund management products work. This is fundamental because when you have an institution with a wealth of knowledge, everything becomes easier process-wise.
The CBI is also very quick to implement new regulations and updates that happen through the EU legislative process, which remains a critical competitive advantage for the cross-border distribution of products and services. There is a significant amount of ongoing engagement between CBI and the industry. The transparent nature of this process means businesses have a good grasp on the direction of travel– asset managers are not seeking out less regulation but instead want steadiness. Therefore, it is important to have a clear direction of travel from a regulatory standpoint, including a clear schedule for product approvals. The same can’t be said for other countries across Europe.
Post-Brexit dividendsThe second element of success is the country’s location since Brexit. There is no question Brexit has had a positive impact on the country’s fortunes, specifically as it relates to asset management, and there are multiple reasons for this, including Ireland’s longstanding and close ties to the UK - sharing a common language, time zone, and a comparable legal system.
For UK-based companies, many of which are part of US groups, Ireland has offered companies the opportunity to relocate their business with as little disruption as possible, mainly due to the Common Travel Area arrangement. It is no wonder that a report by New Financial revealed Dublin was the leading beneficiary for Brexit relocations, with the city welcoming 135 new financial companies between mid-2016 and early 2021, equating to one-quarter of all Brexit-related moves. This was followed by Paris with 102 relocations, Luxembourg with 95, Frankfurt with 63 and Amsterdam with 48.
Ireland’s eco-systemThe third element that has set Ireland apart is the overall ecosystem. For the past 30 years, there has been a conscious effort to attract technology companies to the 'Silicon Docks' business district. The country already had the infrastructure in place pre-Brexit to attract top-class businesses, which has been a major factor as it has made it easier for others to join – it is even possible to start small and scale up quickly.
There is no other EU country with such a diverse ecosystem, and this has created cross-pollination not just in skills and competencies but around culture too. A key avenue for this has been immigration and access to global talent, which has allowed the financial services sector to compete globally as well as scoring very high in terms of diversity and inclusion.
Looking aheadFor Mediolanum, we originally chose Ireland as a place to expand our fund management business because it was a politically stable country in the Eurozone with a transparent tax system, and it was open for business. The Irish ecosystem enabled us to outsource and sell innovative products, and given our multi-manager approach, we needed easy access to international asset management companies in the US & UK. This made Ireland the natural choice.
When we joined, Ireland was the new kid on the block, and now the kid has become an experienced adult, leading the way in many sub-sectors within financial services. The country has a great opportunity to continue to be a leader in the investment management industry and broader financial services on a global scale.
Having said that, for the industry as a whole and for Ireland Inc, it’s not healthy to be the only game in town. As we saw with London and Brexit, it’s dangerous for global businesses to have all their eggs in one basket. For us, we want to see Ireland continue to flourish, but competition is good, and we also want to see other countries and cities do well to strengthen the global financial ecosystem.
© 2023 funds europe