DUBLIN-Bank of Ireland wants a bigger slice of the business servicing hedge funds and has chosen Belfast as a launch pad, bringing a taste of Dublin's thriving asset management industry to the once troubled city.
Liam Manahan, Managing Director Bank of Ireland Securities Services (BOISS), told Reuters political stability heralded by a new power-sharing government in Northern Ireland had drawn the bank to open a new centre in the religiously-divided province.
"This is the dividend from what has happened in the North and it's lovely to be able to look at this in a way that two years ago we mightn't have," he said in an interview.
Bank of Ireland, which is also expanding its existing retail and business banking services in the province, said on Thursday it would create 149 jobs in Belfast over the next five years to service offshore hedge funds administered by the bank.
"Our strategic plan is very clear in that we have to grow our capability in the hedge fund area," said Manahan, whose division services $160 billion of assets for fund managers.
Only about $3.5 billion of that is on behalf of hedge funds, however, despite the fact that between 25 and 30 percent of the world's hedge funds are administered in Ireland.
"It is not our strongest area but we have committed to developing our capabilities because it is the fastest growing area of the business we are in. It is growing at a rate of over 20 percent per annum, we want to get our fair share of that."
Outgrowing Dublin
Manahan said profits generated in Belfast, although not the funds themselves, would be subject to the UK's 30 percent corporate tax rate versus 12.5 percent in the Republic of Ireland but that other advantages outweighed that.
A large, well-educated labour pool that has yet to be tapped into by a local fund industry was one major attraction.
"There are 750,000 people living within working distance of Belfast. There is nobody in our industry located up there," said Manahan, adding that as a "first mover" into the market BOISS could grow business there "significantly and fairly rapidly".
Moving into Northern Ireland was an obvious step for an Irish fund industry that has fast outgrown Dublin's International Financial Services Centre (IFSC) and now services over $1.5 trillion of the world's assets under management.
"Nobody ever thought when the IFSC was established that you'd be having big funds present in Kilkenny, Waterford, Cork, Limerick and now moving to Navan, to Naas to Galway, Athlone," said Manahan.
"It is a fantastic success story and what we believe is that Northern Ireland can certainly play a growing role."
State Street Corp, the world's biggest institutional money manager, said earlier this month its acquisition of Investors Financial Services Corp meant it now had some 2,000 employees in Ireland and that assets under administration in the country jumped 50 percent over the last year to $80 billion.
Eastern Challenge
Manahan said Bank of Ireland's existing securities services business, which employs 370 people in Dublin, was currently growing at a rate of over 22 percent a year and that he saw no reason for that to slow.
"There's absolutely nothing in any of the publications that one reads, there's nothing to suggest that there's going to be a slowdown in this," he said, pointing to growing demand for pension products in a world where people are living longer.
"We're still dwarfed by Luxembourg which is Ireland's main competitor but it is such a huge market, there is more than enough space not only for Luxembourg and ourselves but probably for one or two other locations as well."
Manahan said he expected challenges to emerge from Eastern European states who have studied both the success of Ireland's overall economic model and the low taxes and flexible regulatory environment that have driven a boom in financial services.
"Other centres unquestionably are looking at us and we welcome that. It keeps us on our toes," he said.
"We want to constantly develop the business here, it constantly evolves, it doesn't stop. It's like, why are we going to Northern Ireland? It's because we see opportunity."
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