Irish financial system can withstand ‘cliff-edge’ Brexit

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Ireland is seen as the EU member state most vulnerable to the threat of an unruly exit by Britain. Above, an Irish national flag, left, flies alongside a European Union (EU) flag in the centre of Dublin. (AFP)
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Ireland is seen as the EU member state most vulnerable to the threat of an unruly exit by Britain. Above, an Irish national flag, left, flies alongside a European Union (EU) flag atop of Government Buildings in Dublin, Ireland. (AFP)
Updated 17 January 2019
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Irish financial system can withstand ‘cliff-edge’ Brexit

  • Irish Central Bank Deputy Governor Ed Sibley: I am satisfied that from a financial stability perspective, these cliff-edge risks are now manageable
  • Ed Sibley: This is not to say that a hard Brexit will not be bumpy for the economy and for the financial system. Indeed, some level of market disruption would be inevitable

DUBLIN: The Irish financial system can cope with a hard Brexit — and the “most significant” firms are already implementing their contingency plans, Irish Central Bank Deputy Governor Ed Sibley said on Thursday.
Ireland is seen as the EU member state most vulnerable to the threat of an unruly exit by Britain, from the implications for its currently seamless border with the British province of Northern Ireland to the tightly intertwined trade with its nearest neighbor.
“I am satisfied that from a financial stability perspective, these cliff-edge risks are now manageable,” Sibley said in a speech.
“This is not to say that a hard Brexit will not be bumpy for the economy and for the financial system. Indeed, some level of market disruption would be inevitable,” he added.
But he said the financial system could withstand such turmoil.
“The Irish banking system is considerably more resilient than it was, and the most significant firms operating in Ireland across all sectors have, in line with our requirements, prepared and are executing contingency plans for a hard Brexit.”
Sibley added that the risks to Irish consumers from Britain crashing out of the EU in March without a deal are mitigated to the greatest extent possible, but that the central bank was conscious of some remaining risks to the detriment of consumers.
These include the closely connected Irish and British insurance markets that Sibley said had required the central bank and government to draft legislation to protect insurance customers in the event of a no deal Brexit.
While he said the vast majority of Britain- or Gibraltar-based firms have taken appropriate action to ensure they can continue to provide service to Irish consumers, the draft legislation provides for a temporary run-off regime allowing those without appropriate plans to service existing contracts for three years.
The legislation will not allow these firms to write new business, including the renewal of existing policies, and Sibley cautioned that even with the mitigation, the supply of niche insurance products may reduce or end altogether, given the potential increased costs and frictions.
Separately on Thursday, the Motor Insurers’ Bureau of Ireland (MIBI) told road users that their vehicles will need a Green Card to cross the border into Northern Ireland or travel to Britain if it leaves the EU without a deal or some kind of transitional arrangement.
Currently all Irish vehicles can travel seamlessly through Northern Ireland, but MIBI warned motorists that they should contact their insurer or insurance broker one month in advance to ensure they receive the documentation in enough time if the prospect of Britain crashing out of the EU on March 29 remains.


Brent eases from 2019 highs as markets await US-China trade talks outcome

Updated 11 min 42 sec ago
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Brent eases from 2019 highs as markets await US-China trade talks outcome

  • The slight downward correction was driven by concerns about the health of the global economy this year
  • Bank of America Merrill Lynch expects Brent prices to average between $50 and $70 per barrel

SINGAPORE: Brent crude oil prices eased away from 2019 highs on Tuesday on caution that economic growth may dent fuel demand this year, although supply cuts led by OPEC still meant markets were relatively tight.
International Brent crude oil futures were at $66.08 per barrel at 0220 GMT, down 42 cents, or 0.6 percent from their last close, but still not far off the 2019 high of $66.83 a barrel hit in the previous session.
US West Texas Intermediate (WTI) crude futures were at $55.71 per barrel. While that was up 12 cents from their last settlement, it was below the $56.33 2019 high from the previous day.
Traders said the slight downward correction was driven by concerns about the health of the global economy this year.
Bank of America Merrill Lynch said in a note that the Sino-American trade dispute was hurting economic growth globally.
“Addressing global trade tensions is key for improving the economic outlook,” it said in a note.
China’s vice premier and chief trade negotiator, Liu He, and US Trade Representative Robert Lighthizer lead a round of trade talks this week in Washington.
Considering the economic outlook and supply and demand balances, the bank said it expects Brent prices to average between $50 and $70 per barrel, “anchored around $60.”
Despite some caution around trade, global oil markets remain relatively tight because of supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), with top crude exporter Saudi Arabia cutting the most.
Saudi seaborne crude exports fell in the first half of February, with departures standing at 6.204 million barrels per day (bpd), a 1.341 million bpd decline on the previous month and 0.91 million bpd decline on the year, data intelligence firm Kpler said.
Further providing oil markets with support are US sanctions against petroleum exporters Iran and Venezuela.
Venezuela is a major crude supplier to US refineries while Iran is a key exporter to major demand centers in Asia, especially China and India.