Turtle Bunbury

Writer and Historian

 
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THE DOCKLANDS - THE IFSC

From 'Dublin Docklands - An Urban Voyageby Turtle Bunbury (MGP, 2008)

The International Financial Services Centre

Haughey’s Legacy

In the opening weeks of 1987, a revolutionary concept was being whispered in the corridors of Irish power; namely Dermot Desmond’s idea of creating an International Financial Services Centre (IFSC) in Dublin. Considerable pressure was put on the incoming Fianna Fáil government to establish this new centre in either Ballsbridge or Sandyford. The then taoiseach Charles Haughey resisted, believing the Custom House Docks could be the perfect location. The area already enjoyed the financial incentive benefits of the Urban Renewal scheme. CHDDA Secretary Gus MacAmhlaigh concurred, suggesting that the IFSC could do for the northside what the Guinness family did for the southside when they relocated from Mountjoy Square to Iveagh House on Stephen’s Green. Such comparisons sat well with Haughey who was rapidly seeing the potential of the IFSC to be one of the shining lights of his legacy. In March 1987, the government took the crucial decision to locate the IFSC in the 27-acre Custom House Docks.

CONSTRUCTION TIME

The CHDDA team devised a Planning Scheme, later the master plan, drawn up by Murray O’Laoire Architects. This showed the proposed location of all buildings. The tax incentives were in place. All they needed now was a developer. In September 1987, after a tendering process in which eight consortia participated, the IRL£200 million contract to develop the IFSC flagship was awarded to the Custom House Docks Development Company Ltd. The consortium comprised of Mark Kavanagh’s company Hardwicke Ltd, British Land Co and McInerney Properties. Their proposal was judged to be the best overall concept although it certainly helped that British Land was backed up by a letter of credit from NAT West. McInenery subsequently withdrew and it became a 50/50 consortium between Hardwicke and British Land.

THE VALUE OF THE RIVER

The IFSC was designed by Burke-Kennedy Doyle and Benjamin Thompson & Associates. The first three blocks were built simultaneously. They were state-of-the-art, the first of their kind in Ireland, with very high specs such as 4.2m/13.7ft floor-to-floor and cutting-edge air conditioning. The West Block was completed in April 1990; the North and South Blocks the following year. These three glazed blocks swiftly became key symbols for the whole Docklands regeneration project. The government’s willingness to support such a project represented a major public statement of a brave new era in Ireland’s economic development. It was also arguably the first time in many decades that anybody had considered the banks of the Liffey to be an attractive place to own an office. Slowly but assuredly, the City was awakening to the real value of the river that was patiently flowing through its heart.

THREE WISE MEN

Meanwhile, in early 1988, a trio of public servants took the first of many, many flights as part of an enormous campaign to sell Dublin as an emerging financial centre. Known in governmental circles as the Three Wise Men, they were Séamus Páircéir, former Chairman of the Revenue Commissioners, Tomas O Coifaigh, former governor of the Central Bank, and the late Maurice Horgan, former second secretary at the Department of Finance. (Páircéir later succeeded Benson as Chairman of CHDDA. He was himself succeeded by Professor Dervilla M X Donnelly, former president of the Royal Dublin Society). The Three Wise Men came to an important conclusion early on. No foreign bank would come to an IFSC
in Dublin unless all the Irish banks were located there. Haughey quickly met the Chairmen of both Allied Irish Bank and the Bank of Ireland and effectively ordered them to buy in. Thus, in 1988 and 1989, Ireland’s two largest banks took the considerable risk of buying the first two buildings at the IFSC. In 1990, AIB established its headquarters in the West Block (now AIB International Centre), sited on the former Old Dock and the West Store. Stack B’s brown-brick eastern wing was reduced in size and crowned by a glass-and-steel attic to become the AIB Trade Centre. In 1991, the Bank of Ireland moved to the North Block, renamed La Touche House after the Huguenot family who founded the bank in 1710. The South Block (now IFSC House) was subsequently purchased by financier Dermot Desmond.

THE BREAKTHROUGH

The gamble paid off. The carrot was an extremely favourable corporation tax rate of 10%. By late 1989, major international players such as Chase Manhattan, Citibank and Sumitomo Bank had come on board. Deutsche Bank and Commerzbank were the first German banks to sign up to the project. The Sor ting Office on Sheriff Street and a car park for 1,000 postal workers was conver ted into Custom House Plaza 1 and taken by the Dutch bank ABN-AMRO. In 1991, the CHDDC consortium completed Harbour Master One, taken by the accounting firm Arthur Andersen, and Harbour Master Two, taken by the corporate law firm McCann FitzGerald. The greatest breakthrough came in 1992 when the international giant Citibank was persuaded to purchase one of the riverside buildings, which it partially financed by selling the tax incentives on to other investors. The arrival of Citibank changed everything and they couldn’t build quick enough. Bankers, solicitors, accountants, insurance firms, publishers, taxation advisers – everyone wanted to be a part of it. CHDDA’s remit was extended and they purchased a fur ther 12 acres between Mayor House and Commons Street. In 1996 Christopher Bennett Construction Ltd paid IRL£12 million for a one acre site, with planning permission, upon which New Century House now stands.

It grew in employment terms through the early 2000s to employ 25,000 by 2007. That figure stabilised during the international financial crisis of 2007, and was still at that level in March 2012. In July 2011, the Irish Government published a target for that figure to grow by a further 10,000 in the next ten years, and many in component sectors, for example funds administration, see that happening, with some, for example, in funds predicting that total assets under admin in that sector growing from the record level of €1 trillion under admin in the IFSC (reached in 2011 for the first time) to surpass €2 trillion within the next 3 years. It is to be noted that the IFSC had no connection with events in the domestic banking/property lending blowout amongst the six local banks. Over half the world’s top 50 banks and half of the top 20 insurance companies have an office somewhere in the IFSC.

With thanks to Ken OBrien, Editor, Finance Dublin.

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