Several hundred banks and companies have contacted German authorities about expanding in Frankfurt, as the city vies to become the EU’s principal financial centre after Brexit.
US investment bank Morgan Stanley is the latest to choose the German city as the site of its post-Brexit European hub, it emerged this week, following official announcements from seven other banks, including Goldman Sachs and Standard Chartered, that they will expand operations in Frankfurt.
Other institutions beefing up their Frankfurt offices include Daiwa, Sumitomo Mitsui and Nomura of Japan, VTB of Russia and Woori Bank of South Korea.
“The movement will not be initiated immediately but it will be step by step,” Puttrich said. “ London will remain an important financial centre ... [but] there will be a transfer from those who need to have an office in the European Union, because London will not be in the internal market.
“People talk about several thousand [jobs coming to Frankfurt], but it is difficult to put a figure on it.”
The state of Hesse has had “several hundred contacts with institutions in Great Britain and especially London”, a spokesman added, although many of these discussions were at an early stage. Some of these companies may opt for Paris, Dublin, Brussels or Luxembourg; others may not move.
Nevertheless, the remarks may ring alarm bells that a banking exodus is gathering pace, following a warning from the City regulator that banks were approaching the point where they must move staff out of London to continue operating smoothly after Brexit.
Jobs leaving the City have so far been relatively limited, however, compared with the 751,000 people working in London in banking and related professional services.
Frankfurt, home to the European Central Bank and the German Bundesbank, already hosts the biggest European operations of US investment banks outside London.
Researchers at the Bruegel thinktank have forecast that Frankfurt will take the biggest share of London’s post-Brexit business in a report that predicted the loss of 30,000 jobs in the City.
Frankfurt’s leaders were quick out of the blocks to woo banks. Regional and national politicians met last July, 18 days after the Brexit vote, where they agreed on a campaign to persuade banks to relocate, including a marketing office in London.
Frankfurt shed jobs after the financial crisis and regional authorities think the influx of bankers from London may only take the city back to 2007 banking employment levels.
Puttrich, who also represents Hesse state interests to the federal government, said Germany was making the best of a bad situation. “Nobody wanted Brexit so even if you benefit from strengthening of the financial centre we will still pay a high price.”
The disadvantages are “much bigger for the British but they will have impacts on the EU as a whole”, she said, referring to the end of British payments to the EU budget and the UK’s “enriching” contribution to EU politics.
Puttrich, a member of the ruling CDU party, gave short shrift to the idea the UK could get special help because it might suit German carmakers. Noting that the UK is “not our strongest commercial partner” she emphasised trade ties with central Europe and Germany’s interest in preserving single market rules.
Frankfurt is also vying to host the European Banking Authority once the EU agency leaves its London headquarters after Brexit. The British government fought keenly for the agency and its 150 jobs, created to supervise banks after the financial crash.
This article was written by Jennifer Rankin in Brussels, for theguardian.com on Friday 21st July 2017 18.53 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010