Ireland has a mountain of debt to repay - a whopping €85bn - and a mountain to climb in terms of restoring its reputation with international partners. Yet, Dublin insists it can beat off all competition.
A chilly ripple to the tale
Reputation-wise, Ireland needs all the help it can get. A blow to the fund sector’s confidence came last November when Chile put Ireland’s fund industry on a watch list because its own regulations insisted on withdrawal from a jurisdiction when its sovereign debt dipped below a certain rating.
Kieran Fox, business development director of the Irish Funds Industry Association (IFIA) offers this update on the current situation: “The Irish funds which have been approved by the Chilean authorities for Chilean pension funds to invest in are still approved so they are still permitted to invest in those Irish funds.”
Mr Fox adds that UCITS funds in Ireland are subject to the same rules and requirements as those from any of the other 27 member European states, which makes Irish UCITS funds a European regulated product.
“There has been a lot of engagement with the Chilean authorities. Obviously they are completely entitled to establish whatever rules and requirements they want for their own internal funds industry, but we’ve been speaking to them and working very closely with them as much as we can to inform and address some of those requirements that they have and a lot of that work has evolved around the fact that we have a well established regulatory regime.”
And it is with situations such as this one that the two tales of bankruptcy and boom come back into focus.
The IFIA stresses that the sovereign rating of Ireland has no impact whatsoever on the funds or the funds industry. Fox explains more about the distinction between the domestic financial industry and the international financial services industry.
“Ireland is a hub for the domicile of the fund and for servicing it and that’s really the only bit that gets touched in Ireland. So when you look at the sovereign credit rating of the jurisdiction in which the fund is domiciled, it’s not relevant to the investment fund…. Irish funds’ assets are held by trustee custodians that are typically not Irish banks or Irish custodians but large multinational banks and custodians and the assets are all ring-fenced.”
What’s more, he adds, the assets of these funds are not invested in Ireland, rather they are ring-fenced by global custodians and the assets typically held in other countries outside of Ireland.