merrion street

Check Against Delivery

Introduction

Chair, ladies and gentlemen,

I’m very pleased to be here this morning to address this year’s FIBI International Banking Conference.

As a leading voice for the international financial services sector in Ireland, FIBI continues to work closely with the public sector to develop Ireland’s potential in a globally competitive market.

Before I specifically address the opportunities and challenges facing the sector, I would like to say a few words about the overall health of the Irish economy and the progress we have made since your conference last year.

Irish economy

I am glad to say that my Government’s strategy for economic recovery is working.

The economy is growing, we have seen over 61,000 new jobs created in the past year, and we are meeting our deficit reduction targets.

We were the first Eurozone country to successfully emerge from an EU/IMF bailout; a very significant milestone.

The restoration of Ireland’s investment grade status across the major credit rating agencies reflects the significant progress that has been made.

Ireland has successfully returned to the international bond markets, raising €5.75 billion since January at competitive rates, equating to more than 70 per cent of our funding target for the year. The yields on Irish bonds are now lower than they have been for many years.

Competitiveness is also being restored. Net job creation from both inward investment and by our SME exporting companies was at its highest in 2013 for a decade.

As a Government, we plan to safeguard this progress by ensuring we put the country back on a self-financing basis. Our target is to reduce the deficit to under 3% of GDP by 2015 and to eliminate it altogether by 2018.

Our Medium-Term Economic Strategy published last December sets out our plan for continuing to stabilise the public finances, restructure the banking sector, and, most importantly, grow the economy and create jobs. Our aim is for Ireland to be the best small country in the world in which to do business.

Independent authorities already rate Ireland first in the world for inward investment by quality and value, and as the best country in Western Europe in which to invest. We rank first in the world for the flexibility and adaptability of our workforce, and third in the world for the availability of skilled labour.

More than 1,000 overseas companies have chosen Ireland as their strategic base in Europe. And the same factors which draw overseas firms to Ireland make our indigenous enterprises and start-ups among the most dynamic and innovative in the world.

Indigenous exports have reached a record high of circa €17 billion. Irish innovation in sectors such as ICT, medical devices and engineering is changing and enhancing people’s lives around the world daily.

Last December, Forbes magazine put Ireland at the top of its list of the "Best Countries in the World for Business”. This is a very strong endorsement of the turnaround in our economy.

The improvements in Ireland’s competitiveness and attractiveness for doing business are having a positive impact on employment. The number of people at work has increased by 61,000 or 3.3 per cent in 2013. This is the largest rate of employment growth amongst all OECD countries. Furthermore, the unemployment rate is also falling and is currently at 11.7%, the lowest rate in 5 years, having fallen from a peak of just over 15% in 2012.

But at 11.7%, the rate of unemployment is still unacceptably high. That is why the Government has designated 2014 as the ‘year for jobs’; we will continue to work relentlessly to ensure that the unemployment rate continues to decrease.

The Action Plan for Jobs is a whole-of-Government approach to the challenge of restoring employment. In the 2014 Action Plan, we re-state our goal to have 100,000 more people in work by 2016 (over the level at end-2011) and we set a longer-term objective of having more than 2.1 million people in employment by 2020.

And I believe the international financial services sector can contribute significantly to this.

International financial services

I don’t need to tell this audience about the remarkable success of International Financial Services in Ireland over the past quarter of a century.

Since the development of the original IFSC based on section 30 of the 1987 Finance Act, it has demonstrated an ability to develop its own path and evolve as regulatory arrangements, financial market cycles and industry trends changed.

More than 250 global financial institutions are currently located in Ireland employing 35,000 people. And since 2011 almost 7,600 gross jobs have been created by IDA-sponsored companies even in the context of a very challenging economic period.

The sector therefore plays a hugely important role in the Irish economy.

However, as with any successful business venture, if you get to the top, you have to work harder to stay there! Challenges remain for the sector, but opportunities also abound.

We need to face these challenges and grasp the opportunities in order to maintain momentum and reinforce Ireland’s position.

Regulation

One factor currently impacting on the industry is the evolution of global and EU regulation.

The failures of the financial crisis have quite correctly placed an increased spotlight on the need for appropriate and balanced global regulation of the sector.

Recent events have served as a reminder, if any such reminder was necessary, of the regulatory and governance failures of the past which have had such devastating consequences for Ireland’s economy, its international reputation but most importantly of all for the Irish people.

We know now at a huge cost that there is no alternative to watchfulness and vigilance in financial regulation. We need to show that we have learned from previous mistakes and that the many governance, regulatory and enforcement failures of the past will never recur.

Our goal is for the IFSC to be a leading international financial centre underpinned by a leading regulatory model. We believe that this can be achieved without creating an unnecessary regulatory burden on firms which play by the rules.

We need a regulatory environment that is seen as robust, certain and reliable and that ensures the highest standards for the industry.

And we have made significant progress across a range of areas in terms of reforming and rebuilding regulatory structures, institutions and architecture to ensure a regulatory system that is effective, robust and fit for purpose.

Ireland was the 4th EU member state to transpose CRD 4 (Capital Requirements Directive), which passed into Irish legislation recently.

In Europe, the focus on the single supervisory mechanism and the single resolution mechanism should allow banking union to be completed within a comprehensive and unified framework. Significant progress was made on this during Ireland’s Presidency of the EU. Completing all aspects of Banking Union is vital if we want to break the link between the sovereign and the banking sector.

However, as you are of course aware, the legislative timetable in the EU is broader than just banking. New standards for asset managers, Solvency 2 and UCITs are amongst the items in play that will impact on people in this room.

This legislative programme has demanded a huge amount of time, attention and detail for both the public and private sectors, particularly in a small concentrated international financial services industry like Ireland’s.

I know that both the Central Bank and the Department of Finance engage in structured consultation regarding the impacts and implications of this legislation for industry. I would encourage you to continue to engage with them through these established channels.

Global industry trends

There are a number of other challenges and trends apparent which impact on the industry globally.

These include:

- increased consolidation of operations,

- a focus on specialised areas of competencies

- an ability to use a common platform to operate global products or services and

- the increasing use of technology to drive cost efficiencies and improve customer service.

In Ireland’s case, we’re seeking to respond to these challenges and trends directly - with the public and private sector working together in a sustained and structured way.

This is all with a view to ensuring that Ireland retains its competitiveness and continues to adapt to changing conditions and opportunities within the sector.

Action Plan for Jobs and CHG

As many of you will be aware, the IFSC Clearing House Group, was reformed late last year with a new structure, membership, and a strategy group.

These changes were made to ensure that the Group is fit for purpose in terms of maximising the contribution of the sector to the national collective objectives of job creation, reducing unemployment and economic recovery.

This year’s Action Plan for Jobs includes a number of actions with regard to the international financial services sector including:

- Examining our approach to marketing and promotion including in emerging markets, and developing an implementation strategy for any recommended changes

- Developing Ireland as a global insurance hub arising from the Solvency 2 Directive,

- Developing the FinTech sector,

- Creating a global competence centre for risk and compliance and

- reviewing the regulatory and legislative framework from a competitiveness perspective.

I know that action on all these items is underway and, given the high completion rate of actions under the Action Plan for Jobs, I am confident that they will be delivered. I would encourage you all to contribute where you can.

The Government and, in particular, the Minister for Finance and The Minister for Jobs, Enterprise and Innovation who have responsibility for driving these actions are fully committed to ensuring that policy is effective in the IFS space.

I would encourage you to continue to engage with us with respect to specific areas where policies are under review. I know that the Minister for Finance and his Department has for example in the recent past engaged in a series of consultations regarding R&D tax credits, REITS, SARP and the EII tax schemes.

While there are a range of priorities and interests that need to be balanced on all these matters, as I tell business representatives wherever I go, this Government is always open for feedback as to how we might do better in supporting jobs and growth.

We recognise that we need to be responsive and agile. We also want to move the sector into a position where domestic and international companies can develop together.

In this context, the incubator project with Enterprise Ireland in the FinTech sector is a welcome development. This could form the template for future cooperation as we harness domestic skills with international companies to embed the Irish operations, and future proof the IFS business in Ireland so we can develop and benefit together.

Conclusion

Once again, I would like to thank you for the invitation to speak here today.

I look forward to your support as we continue to develop Ireland’s international financial services sector as an engine for jobs and growth across the enter spectrum of businesses, not just in the IFSC, but in Ireland as a whole.

Thank you.