US, WASHINGTON (ORDO NEWS) — Will Frankfurt win its bet and become a rival to the city of London? Since Brexit was announced, German Hubertus Fat has worked tirelessly to persuade London’s banks to move to the city on the banks of the River Main.
The general manager of the city-promoting “Frankfurt Main Finance” recalls calling him “crazy” when he laid out his ambitions.
With the final phase of Brexit approaching, the matter is more serious than ever. This German financial center in the European Union attracts the majority of banking activities and is desirable, from London before Paris, Milan and Amsterdam. Some may be considering other options, looking for more information about where else they could move to. Still, there is no doubt that this center holds clout and weight alike in the financial fields.
On the capital front, the amounts declared are enormous. According to estimates by the German central bank, about 675 billion euros are supposed to leave London’s banks in favor of Germany, the largest European economy. This amount equates to more than half of the total amount of assets (1.3 trillion euros) that the European Central Bank expects in 2019 to transfer from Great Britain to the eurozone.
Financial giants “Morgan Stanley”, “JP Morgan” and “Goldman Sachs” announced the transfer of total assets of more than 350 billion euros from London to Germany. In addition, more than sixty international banks have registered with the German financial regulator “Baffin”.
Fatt told AFP that Britain’s exit from the European Union represents an “opportunity to reverse the trend” after “thirty years of losing business to London.”
Movements on the horizon
From this perspective, the Frankfurt promoters have worked tirelessly since 2016: “At 7 am after the referendum, we pressed the button and the campaign began,” Fatt said.
As for jobs, the displacement does not seem huge at this point. Initially, the Foundation relied on transferring up to ten thousand financial jobs. German Helipad Bank recently estimated the number of arrivals at about 3,500 between 2019 and 2022.
But on January 1, 2021, UK-based financial firms will lose the precious “passport” that allows them to offer services and products throughout the European Union.
Martin Campbell, director of risk management at a major Japanese bank, believes the move will accelerate bleeding. He personally left London in 2019 to work from Frankfurt.
“Under European Union rules, it is still possible to execute transactions from London on behalf of a European subsidiary. But this will not be possible as of January 1,” he said.
He added that banks also refrain from announcing their move because “the discourse on Brexit from the European Union is so dangerous that nothing can be gained by announcing things.”
“In secret, all these banks are telling their customers + We are in Frankfurt and ready to serve you,” he said.
Carsten Tolle, partner at the “Linkletters” advisory board, believes that if a post-Brexit trade agreement is not reached, global companies will turn to Frankfurt to rent office space.
-We cry twice-
With regard to Frankfurt, the change also appears in the evolution of the type of activity. Before Brexit, the local financial community, about 65,000 bankers, mainly occupied the commercial banking sector.
According to Campbell, “the idea of establishing a large international investment bank in Frankfurt did not exist,” noting that Britain’s exit from the Union created “the investment banking industry from scratch” in the German financial capital.
Even if Frankfurt does not have the vibrant energy of London, the city of 700,000 people depends on other things, such as its reasonable size, suitable for travel and its proximity to nature.
Martin Campbell said, “It took me more than an hour to get to work when I lived in London. Here in Frankfurt, I live in an apartment 20 minutes from my office by bike or public transport.”
“When you are sent to Frankfurt, you cry twice, once upon arrival and once upon departure,” Fat concluded.
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