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Ireland cries foul over competition for Brexit moves

Ireland cries foul over competition for Brexit moves

(Reuters) -- Ireland has complained to the European Commission that it is being undercut by rival centers competing to host financial firms looking for a European Union base outside of London after Brexit.

Last week, American International Group Inc. became the biggest group so far to pick Luxembourg as its EU base, alarming Irish officials who fear others may follow after British Prime Minister Theresa May won the right to begin the potentially long process of separation from the EU.

While the final terms for doing business with the EU from Britain are uncertain, finance executives say privately they expect Brexit to isolate London and want to establish bases inside the bloc from where they can access its single market, prompting them to look at Frankfurt, Paris, Dublin and Luxembourg as alternatives.

AIG said its move was driven by Luxembourg’s proximity to its European clients and its role as a founder of the EU.

“Other cities in Europe are being very aggressive in trying to win business,” Eoghan Murphy, the minister in charge of promoting Dublin’s financial center, told Reuters, describing what he called “dangerous competition.”

“We have always said ... we would not be predatory ... that we are not interested in brass plating,” he said, referring to the practice of setting up a token operation with a “brass plate” sign outside in order to gain market access.

Although the EU wants to show a united front in divorce negotiations with Britain, the dispute over the division of Brexit spoils is already testing this.

Mr. Murphy said he had raised concerns with Valdis Dombrovskis, one of the European Commission’s most senior officials, about “creeping regulatory arbitrage,” a reference to undercutting rivals with lax rules.

Although banks face strict supervision under the European Central Bank in the euro zone, there is no similarly powerful regulator for insurers and other financial players, leaving decisions on factors such as the size of a local operation to individual countries.

The European Commission declined to comment on the Irish complaint but one official, who asked not to be named, said it “will monitor any developments in this area closely.”



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