The Hindu Business Line

Brexit, a threat to Germany’s investment bankers


Germany’s beleaguere­d investment bankers could face even more competitio­n when rivals move staff to the country after Brexit.

While relocation­s from the UK will initially have little effect, that may change if banks then use their newly-establishe­d presence in Germany to expand in the local market for investment banking services, said Joachim Wuermeling, the head of banking supervisio­n at the Bundesbank.

“This is a dynamic business, and it may well be that when they wake up in the morning and look around them, they may see that they have further opportunit­ies on the ground,” he said. “Frankfurt’s financial centre will become more internatio­nal and more competitiv­e.”

Such a trend would mean more pain for firms such as Deutsche Bank AG. While Wuermeling did not name any banks, the Frankfurtb­ased firm is Europe’s biggest investment bank by revenue and has been losing market share to US rivals. After a series of failed turnaround efforts, it is now studying a merger with smaller German rival Commerzban­k.

Both companies have recently emphasised their German roots, but competitio­n for corporate clients in their home market has eroded margins. Commerzban­k this year cut its revenue outlook because of that, though new competitor­s keep entering. Dutch lender ING Groep announced in 2018 that it wants to increase its German corporate banking staff by 50 per cent over the next three years.

Wuermeling and other European banking supervisor­s have said they are neutral in assessing a potential merger of Deutsche Bank and Commerzban­k.

Any merger is first and foremost a decision for the markets and, in particular, for the owners of the banks involved, said Wuermeling of the deal talks. If this happens, supervisor­s will pay it the highest degree of attention.

A deal between the two German banks could lead to the loss of as many as 30,000 positions, people familiar with the matter have said. Brexitrela­ted relocation­s of bank jobs to Germany may help offset some of that.

Wuermeling said he expects about 2,000 jobs to be moved to the country by 24 banks this year alone.

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