Citicorp is opening a processing center in Dublin - its second in Europe - to handle a growing volume of corporate wholesale transactions.
The banking company, which already employs 140 front-office workers at a Dublin branch, said it plans to add 450 back-office positions over the next three years and will eventually employ up to 1,000.
Recruiting will begin in the first quarter of 1997, assuming the Irish government grants tax and investment benefits Citicorp is seeking.
The center will handle such services as cash management, securities custody and clearing, and trade-related services like import and export letters of credit, collections, and financings.
Citicorp's move underscores a trend among banks to shift unglamorous back office processing operations to low-cost areas.
Ireland set out to woo foreign banks and other financial institutions to its capital city nearly a decade ago. Dublin has proved increasingly attractive to U.S. banks because of a 10% corporate tax rate, low labor costs, English-speaking work force, and good telecommunications.
Citicorp said that though it will retain its existing European processing operations at Lewisham, England - and the 1,800 jobs there - rapid growth in transaction services has created a need for an additional center.
Citicorp has four other wholesale banking processing centers worldwide. One is in Singapore; the others are in Buffalo, Tampa, Fla., and New Castle, Del.
A Citicorp spokeswoman in New York did not rule out the creation or expansion of other processing centers in the future, adding that the bank constantly reviews whether it needs to open or consolidate existing centers.
Bankers Trust New York Corp, Chase Manhattan Corp., and Bank of New York Co. are among the other U.S. banks which have banking operations in Dublin, mainly for fund management, securities custody, and treasury related wholesale banking activities. Several U.S. fund managers and insurance companies have also opened offices in the Irish capital.
"This is a great period for the banking industry but bankers are relatively nervous about their future," observed Charles Wendel, president of Financial Institutions Consulting Inc. in New York.
"As growth slows down and as spreads tighten, banks are scrambling after cost reductions and, given the advent of new technology and networking, they can sell a product in one city and process it another."
The shift to lower-cost operational centers with tax incentives and a stable employee base, he also said, is also giving big banks a competitive advantage over smaller banks.
"It gives the larger banks a particularly significant cost advantage over a community or regional bank that is not in the same position technologically," Mr. Wendel noted.
