1. The Financial Services Industry In Ireland Frankfurt September 7, 2007

2. Presentation Overview IDA Ireland Recent Development of the Financial Services Industry in Ireland Key Success Factors

3. Role of IDA Investment and Development Agency –Government agency with its own Board –Attracts FDI to Ireland –Supports existing companies to develop further activities Provide Information and Advice on –Location, Property Development, Skills availability/cost and the Business Environment Arrange introductions to –Regulatory Authorities, Existing Companies, Advisors (tax, legal, etc), Service Providers, etc Facilitate and assist rapid start-up Tailored financial support

4. California New YorkAtlanta Chicago UK Germany Japan Korea Taiwan Australia Ireland Shanghai IDA Offices Worldwide France

5. Foreign Direct Investment in Ireland FDI in Ireland estimated at €50 billion More than 1,000 companies directly employing approximately 135,000 people 82% of Ireland’s exports Direct expenditure of €15.5 billion in the Irish economy Corporate Tax of €2.8 billion paid by IDA supported companies in 2006 (??) Clusters of world leaders: Financial Services ICT Pharmaceuticals and Healthcare Software and Services

6. Ireland 1987 – 2007 Ireland’s average annual growth in GDP has been 6% p.a. from 1987 to 2006 19872007 Employment1.1 million2.1 million Unemployment18%4.5% Budget Surplus / (Deficit) as % of GNP (9.1%)1.2% National debt as % of GNP118%28% GDP per capita (at 2006 constant prices) €15,339€41,627(est. ) Personal Tax rates35% to 58%20% to 42%

7. Financial Services in Ireland Ireland - recognised as a Centre of Excellence for a range of internationally traded financial services Main areas of activity –Banking –Funds Management/Administration –Insurance –Corporate Financial Services Total industry employment nationally: 70,000+ Dramatic transformation of industry in last 20 years

8. Financial Services in Ireland International Financial Services Centre (IFSC), Dublin Established 1987 Tap into global expansion of financial services industry Provide quality, sustainable employment Aid the re-development of Dublin’s Docklands area Hub for front office activities –400+ companies –20,000 employees

9. Financial Services in Ireland Banking More than 50% of the world’s top 50 banks located in Ireland Ireland is the 11 th largest international banking market globally* Total assets in excess of €822 billion** Assets of the Irish banking industry in excess of five times Ireland’s GDP Activities based in Ireland include: –International lending, fixed income portfolio management, specialist derivatives, treasury, securitisation, short and long-term capital raising, custody/trustee and administration services for mutual funds Source: * Bank for International Settlements (June 2006) ** Central Bank of Ireland (December 2006)

10. Financial Services in Ireland Fund Management, Custody and Administration Leading location for the domicile, management and administration of investment funds Rapid growth – €1.5 trillion in assets (April 2006) administered Approximately 4,500 funds and sub-funds, operated by the key players in the global funds industry Fastest growing global alternative investment funds sector –37% of global assets (€475 billion in 2,000 funds) 280+ international fund promoters 9,500+ employees

11. Financial Services in Ireland Insurance, Reinsurance, Life Assurance and Captive Assurance Ireland - major player in a range of insurance activities 126 international insurance companies – 3,000 employed Ireland - number one centre for cross-border life assurance business in Europe (2006 - Life Assurers wrote €15 billion of premia) –65 Life companies versus Luxembourg (58) and IOM (19). Non-life insurance - Gross premia written €18 billion (2006) More than 200 captive insurers are established in Ireland Ireland is 7th largest reinsurance market in the world

12. Financial Services in Ireland Corporate Financial Services: Substantial population of stand-alone MNC’s including: –Lucent, Porsche, Net IQ, Microsoft, Cisco, PepsiCo, Caterpillar, Oracle, GE Finance, Pfizer, Hewlett Packard, Bristol Myers Squibb, IBM, Wyeth, Volkswagen, Skandia, Probus, Nestle, Mitsui Sumitomo… Activities undertaken include: –Treasury, Cash Management, Group Funding, Payments Factory, Captive Finance, Securitisation, Pan- European Pensions, Group Procurement, International Tax Management, IP & Brand Management and Debt Issuance & Listing

13. Who’s here…? Banking and Asset Financing Corporate Financial Services

14. Who’s here…? Insurance Funds

15. RBS Prudential Fidelity Sun Life of Canada Bear Stearns AIG Cognizant Delta Dental GMAC IT & Software AXA Barclaycard MBNA Churchill (RBS) Prudential Europ Assistance ICT Eurotel GE Capital HBOS Customer Support / Services Deutsche Bank Merrill Lynch Citigroup Fortis GE Capital CIGNA Pacificare Aetna GMAC Mid/back-office Operations Centres Financial Services in Ireland Support activities in Ireland

16. Who’s here…?

17. R&D in Ireland Strong Government commitment to research and technology. Significant Government funding available Industry related research and Academic/joint research programmes. Thriving internationally-recognised research community. Strong links between Industry, 3rd Level Institutions, European Universities and EU Institutions Direct R&D advantages associated with flexibility and innovation from a highly educated people. Centre for Financial Services – Building on Success (Government’s Strategy for future development of FS industry) World class higher education and research in financial services, quantitative management and related fields

18. R, D & I Centres Citigroup R&D centre of excellence for the development of products and processes for Citigroup’s EMEA operations First dedicated R&D centre established by Citigroup worldwide €10 million investment Merrill Lynch R&D Centre of Innovation focusing on the development of technological applications to support ML’s global business. Centre of Excellence for Regulatory Reporting and Compliance €30 million investment Fidelity R&D Centre

19. Key Success Factors

20. Why Ireland ? Regulatory and Legislative framework Skilled and Flexible Workforce One of the best education systems in the world Consistent approach to Taxation policy since 1970’s Pro-business environment Professional Support Network Government Support European Market Access Quality of Life

21. Efficient and responsive pro-business regulatory environment Prompt application of EU directives, facilitating pan-European offering of approved products (e.g. UCITS III Directive, Reinsurance Directive, etc) Highly regarded and reputable Regulatory Authority (IFSRA) Directly accessible to industry Principles-based approach (not hampered by legacy rules) Prudent but progressive Solution oriented for new products Regulatory Environment

22. Operating Environment Common Law framework and Anglo-Saxon business model Continuously amended and refined to support global institutions World class pool of professional expertise Consistency of Government inputs and public policy Proactive public/private industry forum English language and Euro-zone membership

23. Demographic Structure Percentage of People under 25 in the Year 2010 Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision.

24. Labour Force Source: NCB Stockbrokers Population Projections in Ireland and the EU: Ireland’s working population will continue to grow

25. Labour Force Flexibility and Adaptability of Workforce when faced with new challenges Source: IMD World Competitiveness Yearbook, 2007 “Irish workers are not just good at accumulating knowledge. They are also very good at applying it.”

26. Education 1 million+ people in full-time education. 7 universities and 13 Institutes of Technology emphasis on Business, Accounting and Finance courses. Private Colleges and Professional Bodies offer courses at both undergraduate and postgraduate level. 50,000 graduates p.a. across all disciplines 25% are Business, Accounting and Finance graduates.

27. Education The independent IMD World Competitiveness Report consistently rates Ireland’s education system highly Ireland ranks in the top six countries globally on the following criteria: The educational system meets the needs of a competitive economy Economic literacy is generally high among the population University education meets the needs of a competitive economy Education in finance meets the needs of enterprises Source: IMD Competitiveness Yearbook 2007

28. Education Source: IMD World Competitiveness Yearbook, 2007 The Educational System meets the needs of a Competitive Economy

29. Corporate Tax Advantages 12.5% Corporation Tax –consistent policy of low corporation tax since 1950 –fully compliant with EU rules Extensive Double Tax Treaty network –44 countries (10 more under negotiation) Holding Companies Incentives –includes a capital gains tax exemption on disposal of shareholdings of companies in tax treaty countries R&D Tax Credit –A tax credit of 20% in addition to a tax deduction at 12.5% for R&D expenditure in Ireland No Withholding Tax on interest or dividend payments

30. Corporate Tax Advantages Lowest Corporate Tax Rate in Europe Source: IMD World Competitiveness Yearbook 2005, OECD, EIU

31. Professional Support Network Banking and Funds sectors Irish Funds Industry Association Irish Association of Investment Managers Irish Association of Pension Funds Irish Bankers Federation Federation of International Bankers of Ireland Society of Investment Analysts in Ireland – affiliated with CFA

32. Professional Support Network Insurance Dublin International Insurance and Management Association Financial Services Ireland Professional Insurance Brokers Association The Insurance Institute of Ireland The Society of Actuaries in Ireland Corporate Treasury Irish Association of Corporate Treasurers

33. Professional Support Network General Financial Services and Markets Financial Services Ireland Institute of Management Consultants International Financial Services Centre Online Online ACI – Financial Markets Association Irish Financial Services Regulatory Authority Department of Finance Finance Dublin Institute of Taxation Ireland

34. Government Support Pro-business policies from successive governments Business friendly legislation and regulation Significant and on-going investment in education and infrastructure Consistent commitment to low tax model Joint Government/Industry representative groups IDA Ireland – Government marketing and support agency

35. European Market Access Ireland as a launch pad for Europe is a key advantage for international financial services institutions Immediate access to a European market of over 455 million people by locating in Ireland EU Passporting Rules for banking, insurance and investment products position Ireland favourably as a base for co-ordinating and launching products into other European markets

36. Ireland ranks 1st in 2005 Economist Worldwide Quality of Life Index Ranking: Qualityof lifeGDP per person ScoreRank$ (at PPP) Ireland8.3136,790 Switzerland8.1233,580 Norway8.1339,590 Luxembourg8.0454,690 Sweden7.9530,590 Australia7.9631,010 Quality of Life

37. Some Lessons Learned… Cohesive national commitment – from Government, business and regulator – and global reach High quality, accessible and responsive regulation The European dimension Speedy, agile and flexible execution focussed on market opportunities A supportive, welcoming and evolving ecosystem: Regulation Legislation Taxation Education Infrastructure

38. Continuing challenges Globalisation, technology changes and new competitors Changes in marketplace for financial services New business models Regulatory and legislative requirements internationally Changing Irish conditions and costs Tax competition Skills and talent development Research, Development and Innovation (RDI)

39. The Future…. Vision: Ireland becoming a significant player in the global Financial Services industry: Focussed on niche opportunities Recognised as a world-class centre for Innovation and Execution Leveraging key competitive advantages

40. The Way Ahead…. Being a distinctive financial services location: Positioning Ireland as the centre for the translation of EU legislation and regulation into operational platforms Identifying new market opportunities with key players Strengthening innovation capabilities Continuing to enhance the supporting ecosystem, especially in regulation, legislation, tax, education and hard and soft infrastructure Remaining flexible and quick to anticipate and respond to emerging opportunities Focus on high value knowledge-based activities

41. Market opportunities Specialist debt issuance and financing, banking products… Pan European insurance and pension products Centre of scale in asset management Centre of excellence in funds servicing Product development and innovation Technology and process development Build on existing strong base, but recognise continuing challenges from changing market and environment

42. Danke ! For more information please see www.idaireland.com Or contact Damien Hennelly Business Development Manager International Financial Services Division Telephone: +353-1-6034075 damien.hennelly@ida.ie