03.07.2017

London exit: Frankfurt picks up the role of financial hub in Europe

400Germany's financial hub, Frankfurt, is trying to attract its share of the Brexit-driven banker exodus from London by appealing to "risk takers" working in the financial sector.

The UK is widely expected to lose financial passporting rights after its EU exit, which would represent a huge blow to its financial services industry. The EU's passporting rules allow businesses to sell services across the union from anywhere within it and only require companies to be regulated in one country, rather than everywhere they operate.

Frankfurt, the financial capital of Europe's biggest economy, has been promoting itself as a stable city for banks looking to move because of Brexit, with German politicians discreetly welcoming those looking to relocate.

"Frankfurt's chances of profiting from Brexit have significantly increased in the past few months," said Michael Kemmer, general manager of the Association of German Banks (BDB).

Advocates for Frankfurt say it has advantages over competitors like Amsterdam, Dublin, Luxembourg or Paris - beyond its status as Germany's financial hub and the presence of top eurozone regulator the European Central Bank.

"Bank chiefs visiting us here, especially from Asia, are impressed by the variety of developed fields beyond finance, whether it's high tech, IT, health or chemistry," said Eric Menges, director of local business FrankfurtRheinMain, which offers information about the region to foreign financial players.

Germany has pressed hard to be welcoming to international companies, including by accepting tax returns and regulatory submissions in English.

But the country's corporate tax rates are among the highest in Europe, and firing workers under German law is more difficult than bank bosses in London or New York might like.

Neither does Frankfurt, a city of 730,000 people, have the same global stature, glittering image or gamut of financial firms within walking distance as London, a megalopolis around ten times larger. Nevertheless, foreign institutions already account for roughly 80 percent of the 202 banks already present in the city, employing a total of about 10,000 people.

Last week, Nomura and Daiwa said they would move some European operations from London to Frankfurt to smooth over potential difficulties with the UK's exit from the EU.
On Monday, the financial japanese giant Sumitomo Mitsui Financial Group confirmed it will move some of its London operations to Frankfurt after Brexit.

The UK will leave the EU in March 2019, but given the time required to apply for and obtain banking licences, banks need to have full contingency plans in place this year. The Bank of England has asked banks to provide it with their Brexit plans by 14 July.


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