Fears over private equity exodus after pay at German firms outstrips UK

● Key financial services staff could be lured away from London post-brexit

A report has fuelled further concerns over the UK’S status as Europe’s financial services hub after revealing that German private equity firms now pay more than British rivals.

Executive search firm Heidrick & Struggles found that mean pay packages for partners and managing partners in German-based firms are now around 115 per cent of the UK total. Pay levels for associate level staff are also higher in Germany at 104 per cent of British compensation.

The report also suggests it would be easy for Germany to take the crown as Europe’s private equity epicentre.

“Germany is well positioned to become a new hub for private equity with its strong economy, healthy middle market, and perceived relative safety for capital deployment,” it noted.

Higher pay packets abroad could mean private equity professionals may be more willing to relocate from London, which is set to suffer a postbrexit exodus of banking, insurance and asset management jobs.

The report cited political concerns around Brexit as a factor in Germany overtaking the UK.

The study measured and compared total compensation, including base pay and bonus pay for private equity staff in 2016.

Rivals including Dublin and Frankfurt are already emerging as the main beneficiaries of a post-brexit jobs boom.

A growing number of international banks including Standard Chartered have committed to expanding or establishing offices in Germany in the wake of the EU referendum, assuming passporting rights for financial services are lost after Brexit.

Citigroup has notified its bankers of plans to bolster its Frankfurt office, creating 150 jobs. A raft of Japanese banks have also chosen the German financial centre as an EU hub including Daiwa, Nomura and Sumitomo Mitsui Financial Group (SMFG).

Germany’s own Deutsche Bank notified staff in July that it was likely to book the “vast majority” of its assets out of Frankfurt – where its headquarters are based – after the UK leaves the EU.

That is in addition to JP Morgan and Goldman Sachs, which are set to bolster operations in various EU cities, including Frankfurt.

It is expected that the influx of financial services staff over the next four years will result in the creation of up to some 87,700 new roles throughout the Rhein-main region, according to a report released in late August by the lobby group Frankfurt Main Finance.