If you are interested in registering a banking institution in Ireland or obtaining an Irish license of a financial service provider, you should first study the macroeconomic impact of coronavirus outbreak on the functioning of fiscal and monetary systems in this country. This blog post focuses on how the constraints associated with the pandemic have affected the public financial services sector, foreign investment in the Irish banking sector, and the impact of Brexit and the potential risks associated with it.
Impact of COVID-19 on SMEs
The Irish economy is not experiencing the best of times. The government was faced with the need to take emergency measures to increase unemployment, the government deficit and maintain economic stability. Small and medium-sized enterprises found themselves in a very difficult situation.
The Central Bank of Ireland recently published a report on the SME market for the first half of the year. This report is a must-see for all entrepreneurs wishing to register an SME in Ireland.
The report provides some disappointing data, such as:
- turnover in some sectors of the economy fell to 75%;
- firms use different approaches to reduce costs, but in many cases this does not give the desired results;
- 24% of companies stopped working temporarily or permanently;
- the real estate and restaurant sectors made almost full use of credit balances in May, and such sectors are most prone to decline;
- It has become more difficult for SMEs to obtain credit as banks impose higher standards.
In this regard, the European Commission has launched a consultation to examine the views of credit institutions and SMEs on a number of consumer policy initiatives under way before the end of this year and beyond. Initiatives include a revision of the Consumer Credit Agreements Directive.
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In the meantime, you can schedule a consultation to minimize risks in the Irish banking sector by contacting our legal experts. If you need advice on consumer lending in Ireland, including an explanation of current legislation, please contact our qualified specialists.
EU updates in the field of banking and payment services
The transition period for Britain's exit from the EU will end at the end of 2020 and may be extended once by mutual agreement between the EU and the UK. During this period, the United Kingdom will remain a member of the European Economic Area, the Single Market and the Customs Union. Also until the end of this period, the UK will continue to contribute to the budget of the European Union and will be subject to EU law. What will happen next?
The European Commission has issued recommendations for those who plan to obtain a license as a banking service provider in the EU, to register a company for payment services in the UK, to issue a European license for electronic money services at the end of the transition period. This message is crucial for those who provide or receive cross-border services to / from the UK, as they involve radical changes:
- Organizations operating in the United Kingdom will have the rights of third countries when opening branches in the EU;
- UK permits will no longer be valid in the EU;
- Member State rules already apply to branches of British legal entities already established, and the head office in the United Kingdom will be considered to be located in a third country;
- The local branch of the EU will be authorized by the NCA - the national competent authority of the Member State;
- The NCA may require an assessment of the risks associated with outsourcing or supervisory arrangements if the arrangement relates to the UK;
- SEPA transfers will continue to be processed between the UK and the EU, but UK authorities are not required to comply with payment user protection rules;
- If you plan to open a bank account in the UK, EU deposit protection rules will not apply, but Member States' deposit protection regimes will apply when registering a UK branch in the EU.
When establishing a bank in the EU, registering a European insurance company or registering a major listed company in the EU, such institutions need to publish information on how managers reconcile activities with environmental sustainability.
Business people who own companies that operate in more than one jurisdiction or provide services to customers outside their domestic market now face serious challenges as they have to comply with different regimes and requirements. On a regular basis our legal advisors monitor the situation with the latest updates on European financial legislation. You can order advice on structuring financial activities in EU member states to protect your business from wrong steps during these volatile and uncertain times.