Diversified financial conglomerate Bank of America (BofA) has started relocating more than $50bn of derivatives business out of its Irish operations into British subsidiary.
Sources close to the matter were quoted by The Financial Times as saying that shifting the business is part of BofA’s strategy to rationalize operations and leverage from tax breaks resulting out of losses in its UK business.
The move comes after Irish officials expressed displeasure over routing such a huge amount of derivatives business through Dublin, as it may prove risky for Irish taxpayers.
Pending regulatory approval as well as required modification in client contracts, the process is likely to complete by the end of 2013.
A major part of its European operations, including corporate lending, cash management and the derivatives book was being carried out by the lender through the Irish subsidiary, mainly due to low taxes.
The relocation will not affect its corporate banking and cash management businesses in Ireland.