Merrill Lynch has reportedly shifted some of its business to Dublin, a move which will help it reduce its tax bills. One lawyer predicts other banks will do the same.
"A number of investment banks are looking at moving businesses to Ireland," Alastair Wilson of law firm McDermott Will & Emery tells eFinancialCareers. "There's a large differential between corporation tax rates, with Dublin at 12.5% and London at 30%. It's inconceivable that banks won't want to exploit that."
Wilson says Dublin could see a rash of financial services jobs on the back of the differential. "The financial services industry is a lot more mobile than it used to be," he says. "You need people structuring derivatives and sitting on computerised trading floors - that could be done almost anywhere."
Last month, the European Court of Justice ruled that Cadbury Schweppes was within its rights to place subsidiaries in low-tax European countries, as long as they carried out genuine economic activity. The ruling has made it possible for companies, banks included, to transfer activities to low-taxation countries without invoking the wrath of the taxman.