Irish regulation of senior financial executives hinders finding suitable staff — Barclays

The Central Bank’s regulation of senior executives in financial services companies makes it difficult for those firms to find suitable staff, one of the most senior bankers in the country warned Minister for Finance Paschal Donohoe.

The regulator’s regime for assessing the suitability of executives carrying out so called preapproved controlled functions (PCFs) “creates challenges to find acceptable individuals with the required skills,” Barclays Bank Europe chief executive Francesco Ceccato told Mr Donohoe in a meeting in Dublin on April 7th, according to a note of the meeting provided to The Irish Times under a Freedom of Information request.

Barclays chose Dublin as its main EU base after the UK left the European Union. Its operation here has about €117 billion worth of assets, making it one of the biggest banks in the State.

The forthcoming Senior Executive Accountability Regime (SEAR) legislation, which would allow individual bankers to be held accountable for their actions could also present “associated challenges for Barclays in Ireland,” he added.

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Mr Ceccato’s comments are the latest by a firm questioning the Central Bank’s role in how it regulates the industry. Starling Bank halted plans to open an Irish unit last month while Revolut opted not to use a so-called e-money licence it had secured from the regulator.

While Ireland is “hyper-open” by EU standards, the country is “still dealing with the aftermath of the global financial crisis and are still trying to get the regulatory balance right,” Mr Donohoe said in a general response to Mr Ceccato. “The economy has to be managed and progressed without undermining our stability again,” he added, according to the note.

Mr Ceccato attended the meeting alongside Barclays global chief executive CS Venkatakrishnan who was in Dublin to meet some of the bank’s 320 staff in the city.

“The Central Bank assesses the fitness and probity of individuals proposed for certain senior roles in firms, and acts to keep unfit individuals out of the industry,” a Central Bank spokesman said.

“This is to ensure that individuals in key positions within regulated firms are competent. capable, honest and ethical and act with integrity. This is critical to the protection of the public interest.”

At the meeting, the Barclays executives also made clear the bank did not intend to open a retail banking operation in Ireland given the differing regulatory regimes that exist at national level, the note added.

Mr Ceccato’s comments echo concerns he raised about the SEAR regime in an Irish Times interview in March. The long trailed regulations, which was published last month, would force firms to make clear top managers’ responsibilities, making it easier for regulators to go after individuals if they’re seen to take unnecessary, uncalculated risks, refuse to follow correct processes or knowingly commit wrongdoing.

Also at the meeting, Mr Venkatakrishnan noted that the European Central Bank has yet to decide whether securities trading should be in the same location as where the risk on those trades is booked. If it decides they should be in the same place, “that will have implications for staffing at the Dublin HQ [although not a significant volume],” according to the department’s note of the meeting.

Commenting on the issues raided by Barclays, a Department of Finance spokesman said: “It is understood that the issue relates to the application of the SEAR regime to senior management in branches of Irish authorised entities.”