Financial Centre Focus: banking sector employment in Frankfurt – consolidation remains limited

  • Frankfurt’s position in competition with international financial centres strengthened
  • Crisis-induced consolidation not concluded yet
  • Slight decline in banking sector employment by end of 2016

The establishment of the European banking supervision and the creation of the first renminbi trading centre in the euro area have provided a lasting boost to Frankfurt’s position as a financial centre. “This is also reflected in employment in the banking sector”, explains Dr. Gertrud R. Traud, Helaba’s Chief Economist. “The expansion of the European Central Bank to become the principal supervisory authority for banks in Europe has, by itself, led to the creation of around 1000 new jobs in Frankfurt’s financial sector. Although the consolidation process in the industry has not been completed yet, overall we only anticipate a modest decline in employment by the end of 2016, of approximately 2 per cent, to slightly more than 60,000 bank employees”, Traud added. On the other hand, for Germany as a whole, a dwindling branch network can be expected to lead to more extensive job losses.

In comparison to other European banking centres, Frankfurt – where bank employment was only 4 per cent below its pre-crisis level – ranks in the middle of the pack. In London’s financial services industry, most recent figures even show a slight rise in staff levels than in 2008 (+1 per cent), while the financial district of Paris experienced significant personnel reductions (-7 per cent). In this regard, the German financial centre came through the crisis relatively unscathed.

With its wide variety of qualities as a location, Frankfurt remains an internationally attractive financial centre. After a slight crisis-related dip, the number of banks is growing once again. In the third quarter of 2013, 193 banks had established headquarters in Frankfurt. On the other hand, the number of representative offices of foreign banks appears to be declining, while the number of operating branches seems to be on the rise.

To Study in English or German

Financial Centre Study: Frankfurt moves upwards with China

  • Long-term opportunities for Frankfurt as a renminbi hub
  • Helaba survey of Chinese banks confirms qualities as a location
  • Essential to pull together in supporting Sino-German financial centre relationship

China’s decision to choose Frankfurt as the first offshore clearing location outside of Asia is a strong signal to the financial community. But as Dr. Gertrud R. Traud, Helaba’s Chief Economist, explains, “There is still a long way to go before a real renminbi hub is established. Currently, it is more of a stylish-looking feature on Frankfurt’s Chinese outfit.” If local players in the financial centre continue consistently pulling together on this issue, the German financial centre has good chances in the long term of attaining a particular significance for the Chinese currency.

Helaba has conducted a survey among large banks from China located in Frankfurt in order to investigate the central qualities that the city possesses as a location and its significance for Chinese players. In analysing the survey, it was apparent that the global expansion of China offers a variety of opportunities for the leading German financial centre. Frankfurt enjoys an excellent reputation in the financial world and acts as a powerful magnet to international players – and to those from China, too. In this regard, Frankfurt has the unbeatable advantage of being the financial centrepiece of a globally significant economy, which is closely intertwined with the Middle Kingdom. With their branches in Frankfurt and Shanghai/Beijing, a number of commercial banks also make a significant contribution towards fostering closer ties between the financial centres.

The journey of Chinese banks to the German financial centre began as early as 25 years ago. In the meantime, each of them employs around 30 to 150 people. Their operations are focussed on trade finance activities between the two large economies and, in this respect, having an office in Frankfurt is indispensable for their business. Chinese banks want to be active at the heart of the banking district as well as in immediate proximity to other institutions from their home country. The various qualities Frankfurt possesses as a location, which had emerged from previous financial centre surveys, were confirmed. In summing up the results of the new study, Traud says, “If the ties between German and Chinese financial centres continue to be supported with such commitment, Frankfurt will move upwards together with China”.

To Helaba Press Release

CFS Index

CFS Index Edges Down

CFS Index: Financial institutions expecting decline in revenues and earnings, despite positive quarterly results

The CFS Index, which measures the business climate of the German financial industry on a quarterly basis, edges down 0.9 points to 112.9 points. The expectations deviate strongly from the current positive situation of the surveyed financial institutions and service providers. The firms’ revenues and business volume are significantly increasing. On the other hand, the financial institutions in particular are anticipating a strong decline in the current quarter. However, the investment volume is to remain almost unchanged. Job cuts at the financial institutions are also proving more modest than expected. The score of 100 on the jobs parameter now indicates a neutral sentiment, following significant personnel reductions in 2015. Read more

RMB Centre in Frankfurt deepens and consolidates German-Chinese economic relations

Germany is the largest economy in Europe and now home to the euro zone’s first renminbi clearing bank. Its economic relations with China have a long tradition and are continuing to grow steadily. China is currently the fifth largest export market for Germany and Germany is also the second largest supplier of goods and services for China. In short, Germany is by far China’s most important trading partner in Europe. Read more

Fintech Studie

Rhein-Main-Neckar is Germany’s Most Dynamic FinTech Region

  • In 2015 1.2 billion euros were invested in German FinTech companies
  • 250 FinTech companies employ about 13,000 people in Germany
  • Germany is the second largest FinTech location in Europe – behind Great Britain and the fourth largest in the world
  • Berlin and the Rhine-Main-Neckar Region are the leading locations in Germany
  • Number of FinTechs in the Rhine-Main-Neckar Region grew in 2015 by 22 percent to 56

In the German FinTech sector the entrepreneurial spirit prevails: the number of young technology companies in the financial services sector, FinTechs, grew last year by 32, now totalling 250. The amount of Venture Capital funds invested in these Start-Ups has nearly tripled from ca. 200 million Euros in 2014 to 576 million Euros in 2015. In Europe, only the UK has the edge, with 707 million Euros being invested in FinTechs. The British FinTech scene now employs around 61,000 people whereas in Germany FinTechs employ about 13,000 people. Taking into account the acquisition of 360T by Deutsche Börse, the total investment in German FinTechs for 2015 is 1.2 billion euros.

Within Germany, two regions have distinguished themselves as FinTech hotspots: Berlin is currently home to 70 companies and the Rhein-Main-Neckar region is home to 56. The Rhein-Main-Neckar Region, however, has proven to be the most dynamic in the past year. The number of FinTech companies there rose by 22 percent compared to the nationwide growth of 13 percent.

These are the findings of a study commissioned Frankfurt Main Finance and conducted by the auditing and consulting firm EY. The study examines the German FinTech industry and identifies potential areas for advancement.

“The region is much broader and more dynamic than generally assumed,” says Jan-Erik Behrens, one of the study’s authors and executive director at EY. “There are a surprising number of FinTech companies quietly but effectively pursuing their work. Even though two-thirds of the companies studied come directly from Frankfurt, the appeal of the financial centre goes far beyond the city limits of Frankfurt and Eschborn. Compared to the rest of Germany the region is in second place, falling closely behind Berlin and significantly ahead of Munich,” said Behrens. “Above all, in the recent years the region has gained significant momentum.”

Compared internationally, Germany has rallied strongly in recent years, according to Christopher Schmitz, co-author and partner at EY. “The German FinTech industry is one of the challengers in the market. It is clear that Germany and particularly the region around Frankfurt will play an even greater role in the future if the planned Frankfurt FinTech Centre is realized.”

Support from Dialogue Forum FinTech Frankfurt Rhein-Main

“Dialogue Forum FinTech Frankfurt Rhein-Main, an initiative of Frankfurt Main Finance with support from EY, is comprised not only of some 50 public and private institutions but also numerous FinTech companies (list of members enclosed). They are united in the goal of establishing an attractive, successful, and sustainable FinTech ecosystem in the region and to see who can bring what to the table,” explains Dr. Lutz Raettig, spokesman for the Executive Committee of Frankfurt Main Finance. “The support and engagement we’ve seen is quite remarkable.”

Under the leadership of Tarek Al-Wazir, the Hessian Minister of Economics, Transport, Energy and Land Development and member of the board of Frankfurt Main Finance, the State of Hesse has initiated the establishment of an independent and inclusive FinTech Centre in Frankfurt. “As part of the digital initiative, we are working closely with the city, the region and local industry to create a centre for young FinTech companies. Our region has the best conditions for this, offering the necessary infrastructure, the university landscape, the proximity to the regulators, the ECB and the Bundesbank, and networking with industry. Moreover, Frankfurt has the international connections that are essential for a global FinTech industry. This initiative will permanently strengthen Hessen as a business location,” says Al-Wazir.

The venture is also actively supported by the City of Frankfurt. Peter Feldmann, Lord Mayor of Frankfurt, explains, “Our objective is to make Frankfurt the number one FinTech hub in continental Europe. Here, young entrepreneurs will discover the most international city in Europe with the highest economic potential. To this end, we cooperate extensively with the State of Hesse and the Finance Industry. Our optimal resources have been and are consistently confirmed in numerous city rankings.”

This support convinced WebID Solutions, Europe’s leading provider of high-security AML compliant verification and online contracting procedures. CEO Thomas Prince announced at Börsen-Zeitung’s Finanzplatztag (Financial Centre Day) that WebID wants to move their offices to the financial centre and, if possible into the new FinTech Centre. “We are planning a six-fold increase of our revenues in 2016 and our customers are here. In addition, the commitment of those involved with the FinTech initiative is quite unique. The financial centre offers us the broad international network needed for our planned expansion. We witnessed this first hand on delegation trips to India and Korea. We brought back very concrete business approaches that will secure additional growth potential.”

Deutsch Börse has emphasized its broad commitment to FinTech. Just last week, they presented their FinTech initiative in Frankfurt. Furthermore, Eric Leupold, Head of the Venture Network of Deutsche Börse, sees the financing situation for these growing companies significantly improving. “Deutsche Börse’s new Venture Network is in Frankfurt and ready to bring high-growth companies together with investors. We are committed in every way to the financial centre.”