Nearly one-fifth of all wholesale finance activity within the European Union could shift to Ireland, according to a Brussels think tank.
A new Bruegel report says that Ireland is in line to become a major European financial powerhouse after Brexit.
Ireland currently accounts for 2% of the EU's wholesale activity, but this share could climb to 15% or 18% once Britain leaves the EU.
Global banks are looking to move roughly €1.8 trillion of UK assets out of London, with some 10,000 banking jobs and 20,000 professional services roles up for grabs. Dublin would face competition from not only the likes of Frankfurt, Paris and Amsterdam for these positions, but also Brussels, Luxembourg, Milan, Vienna and Warsaw.
The report states that roughly 35% of London wholesale banking currently relates to clients in the other 27 EU member:
"Thus, about €1.8 trillion, or 17%, of all UK banking assets might be on the move as a direct consequence of Brexit."
The UK’s global share of activity looks set to shrink from 90% to 60%, regardless of whether there is an integrated wholesale market or one fragmented along national lines post-Brexit.
"The starting point is that financial firms with a MiFID passport can serve EU27 clients from anywhere in the EU27, just as they currently do from London," it notes.
Given that it is currently only second to London in terms of hosting the European operations of US investment banks and is home to the European Central Bank, Frankfurt is set to become the main centre with 45% of the market.
Paris will benefit from hosting the European Securities and Markets Authority and already several large banks by possibly getting a 20% slice. Dublin and Amsterdam would have 15% and 10% respectively.
In the scenario that assumes integration and less of an importance on all activities in one location, Dublin would enjoy a 18% slice.
The report continues:
"The fact that several countries are vying to attract business from London suggests that they hope to reap the benefits from having larger financial sectors, not least in the form of additional tax revenue.
"At the same time, countries with larger financial sectors face higher potential costs associated with potential public expenditure in case of financial turmoil. These potential costs would be shared by all euro-area countries in a full banking union, but not in an incomplete banking union, as is currently the case.
"It will be a challenge to keep a sense of the balance between the benefits and potential costs across euro-area countries."
