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“A hard Brexit, without adequate transition arrangements, is likely to be extremely disruptive for the financial services sector,” say the task force papers, which have been released under freedom of information rules.
Such findings assume no transition deal, no determination on the equivalence of trading rules between the EU and UK and no bilateral deals with the UK. Ed Sibley, deputy governor of the bank, said in a speech on Tuesday that Brexit will have a direct impact on all financial services firms in Ireland, “It is entirely plausible that there will be a ‘hard’ Brexit, with no transition period.
Much more work needs to be done to prepare for this plausible scenario, particularly in the insurance sector,” Mr Sibley said. The central bank has previously said that a hard Brexit could lead to the loss of 40,000 jobs in Ireland after 10 years and shrink the economy by 3 per cent.
The release of the papers comes amid mounting concern that deadlocked talks in Brussels could lead to a no-deal Brexit in 2019, without any transition to a new regime. That raises the prospect of an abrupt shift in financial markets as UK companies are treated as a “third country” operators, without so-called passporting rights to operate in Ireland on the same basis as in the UK.
The task force cited research by PwC, the professional services firm, for the Association for Financial Markets in Europe, which said the Brexit transformation plans of many banks were complex and could take time to put into place, involving restructuring legal entities and gaining regulatory approval.
The report acknowledged that the level of cross-border transaction activity in retail banking was limited but noted that Irish and British banks would not be able to passport into each other’s markets for deposits, loans, leasing, payment and advisory services. [...]
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