Dublin stakes out role in financial services. Custom House center already has 31 companies; drawing young Irish
The first signs of building are to be seen on the long-derelict site opposite Dublin's 18th-century Custom House. The construction marks the beginning of this city's bid to become a major world financial services center. The plan is the brainchild of Irish Prime Minister Charles Haughey. As soon as he returned to power in February 1987, he established a committee of leading financial and economics experts from the private and public sector to come up with ways to bring financial services money and jobs to Dublin. Within weeks they produced a blueprint for a $250 million project.
With such high-level backing, plans have advanced swiftly. ``At first we had a credibility problem about Dublin,'' concedes Dick Doyle of the Industrial Development Authority, the state agency marketing the center. But with 31 companies committed to opening there, Mr. Doyle now sees Dublin eventually becoming a world leader in three or four types of financial services.
He points to asset financing and multinational treasury management as areas in which Dublin could become a leader. With more than 900 multinationals operating in Ireland, the IDA is now encouraging them to consider Dublin as a location in which to centralize their treasury management. Allied Irish Bank, which will set up a number of operations in the new center, is already a recognized leader in trading in ECUs, the European currency unit.
Among the foreign institutions setting up in the center are two top banks from the United States, Citicorp and Chase Manhattan. Wang Finance, headquarters of the computer company's leasing operations outside the US, has already opened its doors in Dublin. It will move to the new center when the first phase is completed in late 1989.
Top Japanese and West German banks are also interested. Doyle confidently says that several of the top seven Japanese banks will set up in Dublin. By the end of 1988, he predicts, over 50 companies, including some of the world's top names in financial services, will be pledged.
What makes Dublin so attractive is the 10 percent corporate tax on financial services, another initiative of the Haughey administration. This compares with the 36 percent rate in Luxembourg and 35 percent in London. Also enticing are generous capital allowances and the lack of exchange controls on foreign currencies traded in the center.
Any suggestion that the Dublin center will compete with London is strongly denied, however. ``We believe that there is scope for a second major financial center in the same time zone as London operating not as a competitor but in parallel and having immediate and direct access to the City of London,'' Mr. Haughey says.
Beset with high unemployment, growing emigration, and sluggish growth in Ireland, the Haughey government has high hopes for the center. The government hopes it will create 7,500 jobs, attracting home many young Irish people who have made successful financial careers overseas.
The timing is also seen as important. With the 12 countries of the European Community planning to eliminate all remaining barriers to the free flow of goods and finance by 1992, the Dublin center hopes to benefit from what is expected to be a substantial move of funds into the EC.
Even October's stock market plunge is said to be helping. Spokesmen emphasize Dublin's lower costs to newly cost-conscious financial institutions.
What excites more talk in Dublin is the badly needed development it is bringing to a long-depressed area of its inner city. The 27-acre site on which construction work has already begun has lain derelict for more than 10 years, as controversy raged about its future.
The design for its redevelopment, finally chosen by the government last year, has been described as a ``city within a city.'' The development includes over a million square feet of office space, a hotel and conference center, shops and restaurants, and 450 residential units.
Most attractively, it makes full use of its location on the River Liffey. The buildings will surround a number of artificial lakes and pools, and the building housing the financial services center itself will look out on a marina.
Residents of nearby Sheriff Street, one of Dublin's most depressed neighborhoods, are divided on the issue, however. ``They are clamoring for jobs but are uneasy about the future,'' says Mick Raferty of the North Centre City Community Action Project.
He sees the new development as inevitably increasing land prices in the area, thus driving out the last remaining small industry, which provides jobs for locals.
Local fears that the development will destroy the community are quickly denied by Niall Mulcahy of the Custom House Docks Development Authority, which is responsible for the project. ``I don't see any major disruption at all. Urban renewal is our brief,'' he says.