Irish financial services 2008: Good year/bad year
What is set to boom and what is set to bust in Ireland in 2008? Here's our verdict...
It will be a good year for...
Corporate banking
2007 was a bright year for corporate finance professionals in Ireland, with Bank of Scotland (Ireland), Ulster Bank, Bank of Ireland and AIG all ramping up recruitment, and it shows no sign of abating in 2008.
James Hayes, manager, banking and finance, for recruiters Robert Walters, says: "Roles for relationship managers, project financiers and acquisition finance professionals continue to be created and there aren't nearly enough people to fill them."
Picking up credit crunch casualties
As US and to a lesser extent UK investment bankers panic over the sub-prime fallout, a lack of exposure to the complex credit structures has left Irish banks serene. In fact, they are even viewing potential redundancies as an opportunity to loosen the tight recruitment market.
Marcus Kelly, managing director of recruiters MRK International, says: "We could see more Irish people coming back from London, or inevitably one or two international companies will be looking at certain functions here as part of a global restructuring."
He adds: "It's been tight recruiting here in areas like credit and lending."
More fund admin expansion
Blindly optimistic it may be, but nine out of 10 Irish funds industry respondents to a recent Deloitte survey expected little or no impact from the credit crunch in 2008. In fact, 75% of firms also anticipate a further 20% growth next year - estimating the assets under administration to swell to $2 trillion dollars.
Gary Palmer, chief executive of the Irish Funds Industry Association, says he knows of a number of "significant players" in the pipeline to set up shop next year and recruiters claim to be in discussions with small to mid-sized firms with ambitious expansion plans.
Re-insurance
Ireland has been quick off the mark in adopting the Reinsurance Directive, which requires EU states to regulate its re-insurers. It has attracted some big names to its shores - such as XL Re and Partner Re who have head offices in Dublin - and premiums written by Irish firms were up to $3.4bn in 2006.
Although Sarah Godard, CEO of the Dublin International Insurance & Management Association, tells us she anticipates a surge in the number of jobs, recruiters Joslin Rowe - who specialise in insurance - say volumes didn't increase drastically in 2007.
However, Paul Cotter, managing director Ireland, says: "We understand there are a significant number of firms with applications for licences, and we anticipate a rise in candidate requirements in 2008."
And 2008 will be a bad year for...
Northern Ireland as a financial centre
Belfast might be establishing itself as a centre for financial IT software development, but its ambitions to challenge Dublin's dominance as a financial centre have been dealt a severe blow by the UK government's refusal to match the Republic's corporation tax of 12.5%.
The low corporation tax has long been a selling point of Dublin as a fund domicile, but a UK Treasury-commissioned review by Sir David Varney concluded it wouldn't necessarily encourage more foreign direct investment up north.
Domestic banks
The share status of domestic banks in Ireland has taken a bit of a battering of late and prospects for 2008 look pretty bleak.
Allied Irish Bank has seen its share price halve over the past few months, and though it has been cooing reassurances over 2008 prospects, it admits that bad debt levels will increase next year. It expects a $35m hit because of its $500m exposure to sub-prime, and a further €170m write-down on its treasury assets next year.
Meanwhile, Merrion Stockbrokers downgraded Bank of Ireland and Anglo Irish stocks to 'hold' in its report, Irish Financials Going Nowhere Fast.
It said: "We do not expect strong share price performance in an increasingly tenuous environment."
Continued growth?
Despite the optimism, what would happen if the credit crunch continued to bite throughout 2008, as some commentators believe? Would we see mass redundancies in the fund servicing space, or simply an end to the current hiring frenzy?
Cotter says: "There were significant redundancies in London and New York banks in 2001, 2002 and the beginning of 2003. In Dublin, there was simply a hiring freeze. They weren't taking people on, but they weren't letting them go, as they had to manage the work that was already there."
