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Thirty-five years in politics “would probably satisfy anyone”, is the dry response of John Bruton, former Taoiseach of Ireland, when asked whether he misses that game.
“I’m fully sated ... in the nail-biting, ‘will I be re-elected-or-not’ sense of the term politics,” he remarks.
Mr Bruton is parlaying his political skills, however, in his latest incarnation as president of Ireland’s International Financial Services Centre. Indeed, his role is that of a roving ambassador. And on trips across Korea, Singapore and Malaysia as well as Chile and Qatar, he is taking the lead in wooing asset management houses to Dublin and racheting up the numbers of Irish employed by financial companies.
A task at hand is hawking the country’s new liberal regulatory regime for non-Ucits funds. Under the proposed changes, the minimum investment requirement for non-Ucits funds listed in Ireland currently set at €100,000 ($127,000), will be scrapped, opening the door to retail investors. Non-Ucits funds will also face fewer requirements in areas such as share classes, dealing frequencies, counterparty eligibility and disclosure requirements. A third plank is that fund groups will no longer need the approval of the central bank before setting up shop in Ireland.
Spearheaded by Ireland’s central bank, the changes will take effect next year, alongside the Alternative Investment Fund Managers Directive, EU legislation tightening control of private equity and hedge funds.
“Qualified investment funds, which are an Irish-originated instrument, are designed for people who are financially knowledgeable to invest in. It’s not for people who don’t know what they’re doing with their money, and people understand that if they’re investing in a QIF that’s what they’re doing,” Mr Bruton explains.
He adds: “This is offering a product to people who have both a capacity to take risks and an appetite to take risks.”
Mr Bruton hopes the regime will set Ireland apart in the contest among European fund domiciles to attract assets. The mountain of assets under management held in funds domiciled in the country, which hovers at €941bn, according to the latest Lipper data, still trails the €2.1tn based in Luxembourg.
But the push is on to rekindle interest in the Celtic Tiger’s asset management sector as a way to inject momentum into the country’s debt-laden economy.
Mr Bruton pooh-poohs the idea that the introduction of a more liberal regime for non-Ucits funds listed in Ireland clashes with the latest iteration of stricter regulations being written in Brussels as part of the AIFMD directive.
“We’re very pleased that the central bank has acted so swiftly in seeing the AIFMD not as a problem, but as an opportunity to offer something new in the market that’s entirely up-to-date,” he says. “The central bank has been proactive in this matter. It sees itself clearly as first and foremost there to ensure the probity of the industry and the security of everybody who invests in it, but they’re also willing to move forward quickly.”
He continues: “We’re not going to re-launch economic growth without taking risks. I mean risk-taking by those who can afford to take it and who have the wisdom to calculate it properly is essential to the restoration of economic growth.”
Out of crisis, opportunity rises like the proverbial phoenix from the ashes. And Mr Bruton stresses that Ireland’s recent economic meltdown is throwing up opportunities for investment. The cost of office rents have slumped along with the cost of hiring Irish workers.
“We have adapted to the crisis. We recapitalised our banks quite quickly. We’ve recognised the losses,” he says bullishly, claiming that foreign direct investment in Ireland is hitting record levels.
“If you look at all of the eurozone countries that have had difficulty, you’ll see that unit labour costs in Ireland have fallen much faster than they have fallen anywhere else.”
Ireland’s small size is also seen as an advantage in its attempt to bounce back. “One of the things I think is good about the public administration of Ireland is that there isn’t this negative feedback between regulators and administrators on the one hand and industry on the other,” he says. “The regulators and administrators see their role as ensuring probity but also facilitating the growth of the industry to be regulated.”
Mr Bruton does believe that the arrival of AIFMD next year may well lead to the cost of fund listings and management rising.
“There have been quite intense negotiations with regard to AIFMD and there is always a worry that additional cost burdens will be imposed that don’t commensurately add to the security and safety of investments,” he says. “That’s something that is a constant matter of negotiation and I know the industry has been talking quite intensively to the commissioner to the European parliament and to others about this, all the time.”
But Mr Bruton expects that any problems will be “ironed out” in future versions of the directive. What’s more is that he and others in Ireland’s financial services sector are banking on US and Asian managers looking to bring funds onshore and list them in regulated jurisdictions due to the AIFMD’s stricter requirements.
“Generally speaking, people are very receptive to Ireland as a location for investment partly on the basis of our track record,” Mr Bruton concludes. “And I think also because people recognise that we are making an effort to rectify the consequences of mistakes that undoubtedly were made in Ireland in the past. We’re facing up to things.”
1968 University College Dublin, Bachelor of Arts, Economics and Politics
1972 Called to the Bar of Ireland after studying at King’s Inns, Dublin
1969–2004 Member of the Irish Parliament
1981–1982 Minister for Finance
1982-1983 Minister for Industry and Energy
1983–1986 Minister for Trade, Commerce and Tourism
1986–1987 Minister for Finance
1990-2002 Leader of the Fine Gael party
1994-1997 Taoiseach (Prime Minister) of Ireland
2004–2009 Ambassador of the European Union to the United States
2010 to present President of the International Financial Services Centre Ireland
Ireland’s International Financial Services Centre (IFSC)
Established: 1987, to boost activity and employment in the Irish economy
Head office: Dublin’s Docklands
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