Frank­furt leads Paris in race to lure Lon­don bankers

Kuwait Times - - BUSINESS -

In the com­pe­ti­tion to at­tract bankers flee­ing Lon­don due to Brexit it ap­pears Frank­furt is beat­ing out Paris, al­though ex­perts say the race is far from run. “In the first wave of re­lo­ca­tions Frank­furt clearly has been a step ahead of Paris, which hasn’t had much to show,” said Ni­co­las Veron, a fel­low at the Brus­sels think tank Bruegel as well as the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics in Wash­ing­ton.

Thou­sands of well-paid jobs are at stake as banks and other fi­nan­cial com­pa­nies plan to move out of Lon­don some op­er­a­tions and staff that han­dle Euro­pean busi­ness ahead of Bri­tain ex­it­ing the EU in 2019. Sev­eral large in­ter­na­tional banks have al­ready shown their in­ter­est in “Main­hat­tan”, the nick­name given for Frank­furt’s fi­nan­cial dis­trict which is a stone throw from the river Main that flows through the city, home to the Euro­pean Cen­tral Bank. Among them are US heavy­weights Mor­gan Stan­ley, Cit­i­group and Gold­man Sachs, Ja­pan’s Su­mit­omo Mit­sui Fi­nan­cial Group, Daiwa Se­cu­ri­ties and No­mura, as well as Bri­tain’s Stan­dard Char­tered.

“But re­mem­ber that Paris wasn’t re­ally on the radar un­til the end of the elec­toral cy­cle this year,” said Veron. “There are struc­tural changes un­der­way with the new govern­ment but those are very re­cent and will take time to be­come cred­i­ble.”

Po­lit­i­cal sta­bil­ity

“Some in­ter­na­tional banks al­ready have a sub­sidiary or branch in Frank­furt. It is much eas­ier to use these en­ti­ties as a base than build one from scratch in an un­fa­mil­iar ju­ris­dic­tion,” said one French banker on con­di­tion of anonymity.

Paris can at least count on the large French banks bring­ing back em­ploy­ees when they scale down their op­er­a­tions in Lon­don. But it hasn’t had any an­nounce­ments by in­ter­na­tional banks to show for its ef­forts since HSBC’s an­nounce­ment last year that it was to re­lo­cate a thou­sand em­ploy­ees to the City of Light.

Even this was a mit­i­gated vic­tory, as HSBC al­ready has a lo­cal unit in France, so Paris was al­ways go­ing to be a nat­u­ral choice for the bank. With com­pe­ti­tion to at­tract fi­nan­cial com­pa­nies stiff­en­ing be­tween Frank­furt, Dublin, Luxembourg, and Am­s­ter­dam “Paris suf­fers from neg­a­tives not linked to bank­ing, like for ex­am­ple its labour laws,” said Ni­co­las Fleuret, an as­so­ciate at Deloitte. “Banks also want a mod­icum of po­lit­i­cal sta­bil­ity. The be­gin­ning of the year, with the French pres­i­den­tial elec­tion, fed con­cerns,” he told AFP.

“More gen­er­ally, com­par­isons in this area haven’t been favourable for France in the past few years.” One Ger­man fi­nancier said France’s new busi­ness-friendly Pres­i­dent Em­manuel Macron ar­rived on the scene too re­cently to change peo­ple’s minds about his coun­try’s draw­backs. “An­other big draw­back for Paris was hav­ing a pres­i­dent (Fran­cois Hol­lande) who said in his cam­paign that fi­nance was the en­emy” said the fi­nancier on con­di­tion of anonymity. “The pres­i­dent has changed but for many banks it was too late, they had al­ready made their de­ci­sions.”

Jury still out

But the game is far from over, ex­perts said, not­ing that nu­mer­ous banks haven’t an­nounced their in­ten­tions while many in­sti­tu­tions have only planned for a min­i­mum trans­fer of staff and op­er­a­tions given the lack of vis­i­bil­ity on the terms of Bri­tain’s re­la­tions with the EU af­ter it ex­its the bloc in 2019. “We know of around a hun­dred banks search­ing for a new home for their Euro­pean op­er­a­tions and only a cou­ple dozen have made their choice,” said Hu­ber­tus Vaeth, di­rec­tor of Frank­furt Main Fi­nance, the as­so­ci­a­tion pro­mot­ing the city to for­eign banks.

“By the num­ber of an­nounce­ments, Frank­furt is cer­tainly ahead, but you’ve got to look into the de­tails of how many jobs are ef­fec­tively be­ing moved, and most im­por­tantly which po­si­tions are be­ing moved,” said Fleuret. Paris Euro­place, the group which is lob­by­ing to at­tract Lon­don banks to the city, is un­fazed by the re­cent an­nounce­ments in favour of Frank­furt.

“The sev­eral dozen jobs an­nounced for Frank­furt don’t rep­re­sent yet a real re­lo­ca­tion choice,” said Arnaud de Bres­son, Paris Euro­place’s man­ag­ing di­rec­tor. “When it comes to re­lo­cat­ing mar­ket op­er­a­tions it is Paris which will be best placed. Paris is the cap­i­tal of the mar­kets on the con­ti­nent, while Frank­furt is a city of tra­di­tional fi­nance,” he said, not­ing that Paris al­ready counted 150,000 jobs in the fi­nance in­dus­try com­pared 70,000 for its Ger­man ri­val. —AFP

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