Financial sectors

Some of the main sectors of financial services activity carried out in the IFSC are outlined below:

Fund Administration & Domicilingedit

The original proposal for the IFSC was that it would become a location for high-margin activities such as investment management, banking and securities trading given its low tax rate and proximity to the major centres of London and Paris. However, ultimately few of these companies established offices or relocated to Dublin in the following years and while the level of material employment has grown significantly relative to its former size, it is still well below many of the larger European financial centres in overall terms such as Luxembourg, London, Paris or Frankfurt. Many of the notable fund and investment managers are dealing almost exclusively with domestic business e.g. - Irish Life and Bank of Ireland and many of the examples mentioned in international and domestic media outlets relate to fund domiciling, custody, treasury and more recently trading rather than investment management.

Classic Fund Administration (i.e. fund accounting, fund administration, fund custody and transfer agency) is the largest employer in IFSC making up almost a third of IFSC jobs and totaling almost 9,274 jobs at the last reliable study. The four largest global fund administration and custody providers all have major offices in the IFSC State Street, Bank of New York Mellon, Citibank and Northern Trust, as well as internal fund administration departments from major global investment banks such as JPMorgan, Goldman Sachs and Bank of America.

These fund administrators compromise the bulk of the large standalone multi-national offices in the IFSC (outside of the multi-national technology firms). The remaining large offices are for domestic Irish legal firms (Arthur Cox, A&L Goodbody, McCann FitzGerald, William Fry, Matheson, Mason Hayes & Curran, Dillon Eustace and Maples) and accounting firms (PwC, KPMG, Grant Thornton) supporting the IFS sector.

Fund Domiciling (and Distribution) is where specialist law firms, and specialist administration departments of investment firms (i.e. Blackrock, Citibank, Deutsche Bank), provide legal (i.e. creating fund prospectus, fund listing documents etc.) and other professional services (i.e. fund trustees, fund audit etc.) to Irish domiciled, and often Irish listed, fund structures in various Irish legal fund "wrappers" (incl. UCITs, QIAIFs, MMFs and AIFs). The IFSC is one of the largest and fastest growing locations for UCITS in Europe.

The trade body for the IFSC Fund Administration and Domiciling sector is the Irish Funds (Industry) Association (previously Dublin Funds Industry Association, or "DIMA").

Securitisationedit

The introduction of the Irish Section 110 SPV in 1997, described by PwC as the "heart of the Irish structured finance regime", enabled the IFSC become the largest provider of SPVs in the EU securitisation market, and has made Ireland the 4th largest shadow banking centre in the world. While Irish securitisation SPVs pay no effective Irish corporate taxes (SPVs are deliberately structured in this way), they are estimated to contribute over €100m annually to the Irish Economy from fees paid to local Irish professional services firms (mainly legal, but also accounting and corporate services providers) who create and administer the SPVs. The sector was involved in a major domestic tax scandal in 2017.

Sometimes the Securitisation Sector is merged with the Fund Administration Sector when "total funds administered" data is quoted for the IFSC (or IFS sector).

The trade body for the IFSC Securitisation sector is the Irish Debt Securities Association (IDSA), which was founded by IFSC law firm, Matheson.

Bankingedit

Some of the world's largest banks have offices in the IFSC. Their focus is mainly on administration support for securitisation and structured finance activities, aircraft leasing activities, or conducting in-house corporate treasury and fund administration functions for their parent. There are no examples yet of foreign banks conducting higher margin asset management, investment banking or corporate finance from their IFSC platform (instead usually favouring their bases in London, Paris, Frankfurt or Luxembourg in Europe).

The trade body for the IFSC and non-IFSC Banking Sector is the Irish Banking Federation.

Insuranceedit

The main insurance activities cover Life Insurance, General insurance, Reinsurance and Captive Insurance. There is little insurance risk originated or underwritten in the IFSC and London remains the primary global base for these activities. The only remaining listed Irish insurance company is FBD Holdings who are one of the smaller players in the Irish insurance market. The IFSC occasionally provides an accounting and administration service for products sold on a pan-EU basis through the parent's main channels. The IFSC has a niche strength as a top location in the relatively small Captive Insurance market.

The trade body for the IFSC Insurance sector is the Dublin International Insurance & Management Association (DIMA).

Aircraft leasingedit

The IFSC is the largest aircraft leasing hub in the world with 14 of the top 15 aircraft lessors headquartered in Ireland (including AerCap, GECAS, SMBC and Avolon) and circa 50% of the world's fleet of leased aircraft is managed through IFSC companies. Unlike some other IFSC sectors, the Aircraft Leasing sector includes high margin activities such as origination and financing as well as accounting and administration. While the sector employs around 5,000 people (1,700 directly) (versus Fund Administration at almost 10,000 jobs), and pays less than €40m in Irish corporate tax it is estimated to provide over €500m annually to the Irish Economy (from salaries and fees) making it one of the most valuable sectors in the IFSC. In May 2019, figures from the Department of Finance showed that since 2012, the net assets of the aircraft leasing industry in Ireland was close to zero (€141 billion in Irish domiciled aircraft assets offset by €141 billion in offshore financing); and that the aircraft leasing industry paid only €54 million in Irish corporation tax in 2018. The average salary of employees in the aircraft leasing sector is estimate to be in the region of €165,000.

The closest related trade body for the IFSC Aircraft Leasing sector is the Irish Aviation Authority (IAA) (not exclusively IFSC focused). Aircraft Leasing Ireland (ALI) also represents the sector and is a constituent part of Financial Services Ireland (FSI) and ultimately of Ibec.

Corporate Treasuryedit

The Corporate Treasury sector primarily consists of small IFSC subsidiaries of large non-financial multi-national services organisations (e.g. Pfizer, Xerox), which serve as a hub for in-house treasury functions (i.e. cash pooling, fx hedging), for their global parent and sometimes serving as shared services centres serving multiple locations and functions (providing administration and bookkeeping functions). The level of Irish corporation tax paid by these hubs is close to €200m per annum, making it more valuable to the Irish Economy then the higher profile IFSC Securitisation sector.

Payments processingedit

This is a more diverse sector that covers classic payments companies (US credit card processing companies like VISA and Mastercard), internet and Fintech payments companies (i.e. PayPal, Stripe), and other niche payment processors (i.e. Fexco, TransferMate, Realex Payments, Prepaid Financial Services). The attraction is Ireland's beneficial tax regime for contract manufacturing (previously developed for the pharmaceutical sector in Ireland) which makes Ireland a low / zero tax centre for handling payments.

The closest trade body for the IFSC Payments sector is the Fintech Payments Association of Ireland (FPAI) (not exclusively IFSC focused).

Private Equity and Venture Capitaledit

Private Equity and Private credit firms with offices and investment professionals in Ireland are mainly operated and funded by large American private equity organisations such as KKR, The Carlyle Group and Oaktree Capital Management. Additionally, investments and acquisitions are also made by non-domestic firms such as Brookfield Asset Management's €120M takeover of Imagine Communications, Insight Partner's purchase of a €100m stake in the AMCS Group (in conjunction with the ISIF) and Apollo's takeover of Ireland's largest hotel chain Tifco in a €600m deal in 2018.

Domestic private equity firms include Renatus and most notably Causeway Capital who were responsible for the rescue of Patisserie Valerie in February 2019.

The trade body for the Private Equity and Venture Capital industry is the Irish Venture Capital Association (IVCA).