Financial Services Ireland

Brexit: If you haven’t started yet, you may already be running late

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Brexit: If you haven’t started yet, you may already be running late

There are a number of important things financial institutions need to know about establishing in Ireland in the wake of Brexit, irrespective of it being a hard or soft landing.  First is that the regulator will expect financial services organisations to be ready to operate immediately upon Britain’s withdrawal from the EU in March 2019. The second is that these institutions should not underestimate the journey involved, as it will be more a complex, time-consuming and resource intensive process than many imagine.

There is a hard deadline of March 2019 for a Brexit programme, with a complex critical path that adds pressure.

Designing a  target operating model, informing and obtaining client consent and securing an operating licence from the regulator only gets you part of the way. Establishing the entity, securing the necessary competent resources, building and testing the required infrastructure and processes will pose a significant challenge for most organisations.


Here are some tips for preparing for a Brexit-related banking application in Ireland

Nosce te ipsum’ – Know Thyself

When entering a new jurisdiction and presenting yourself to a new regulator it is important to be completely clear on your business model, target clients, product suite and  what licence(s) you will need.  It is also important to realise that while your organisation may be widely known in other parts of the world, it is essential to take the time to introduce your institution in detail to the Central Bank of Ireland, i.e.  Taking a balanced approach of educating and informing them on the group its history your strategy and products, operating model and key senior team.  For significant institutions it may be that you are also be introducing yourselves to the European Central Bank for the first time so it’s worth making the right impression.

Presenting your institution may appear a regular exercise but the establishment of a new significant European financial institution will have widespread impacts across your organisation including the front office, support and control divisions with significant numbers of people and governance layers involved.  Presenting a clear understandable and consistent picture of the organisation to a regulator requires it to truly ‘know itself’ and to have in place the protocols to manage the considerable coordination and communications through what will be a relatively extended period.

 READ: Without the Four Freedoms, what next for financial institutions?

Understanding the regulatory environment and the application process

Establishing a new banking entity in a European jurisdiction requires a licence from the European Central Bank (ECB).  The application process in Ireland will be facilitated by the Central Bank of Ireland and involves a defined process and extensive and iterative engagement over what can be an extended period.

Brexit application process

The authorisation process encompasses a number of principal stages which cover the following:

The deep dive sessions will seek to cover in considerable detail the fundamental aspects of managing a financial institution; the building blocks of your entity. Topics covered will include:

  •  an overview of the parent organisation or group to which the applicant belongs;
  • ownership and governance structures;
  • business and operating model;
  • organisation of the applicant (including corporate governance arrangements, fitness and probity of key personnel, etc.);
  • risk appetite, models and management frameworks,
  • capital and liquidity
  • funding and solvency projections
  • financial projections (including stress test);
  • business continuity and outsourcing.

The components of a successful application include clarity, detail and consistency; as well as senior-level engagement of appropriate subject-matter experts.  A strong appreciation of these subjects from the perspective of the regulator is core to obtaining a licence.

READ: It’s time to make “no regrets” decisions

Respecting the jurisdiction


One of the key prerequisites for the granting of a licence will be satisfying the regulator on the issue of substance in the jurisdiction. Empty shell financial institutions will not be facilitated, and therefore demonstrating will have the appropriately governing and operating ‘hearts and minds’ based in Ireland is imperative.

The question is not “What is the minimum I can do?”; rather, the key message to deliver is that your organisation is taking all the necessary steps to manage and govern the business in Ireland safely.

           READ: The race is on – Can Dublin win post-Brexit business

Managing the critical path

It’s vital that organisations realise that the submission of an application and the granting of a licence by the regulator is not the end game; a concurrent programme needs to be running alongside the application process to ensure operational readiness.

Building the Brexit program requires the identification of the detailed activities along the critical path. It is this set of tasks and timings that dictate the important milestones and deadlines. For some organisations who have already done the analysis and plotted their plan, outlining their timings for testing and deploying infrastructure, acquiring people, informing and migrating clients, obtaining their licence, when aggregated may only go to illustrate that they should already be well underway with the process.

For those still deciding on location, it may be an unwelcome realisation.

If you’re considering establishing a financial institution in Ireland due to Brexit, or for any other reason, you can contact Cormac Kelly for more information on the regulatory application process.

Cormac Kelly

Brexit Leader
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