Three new members join the financial centre initiative Frankfurt Main Finance

Frankfurt am Main – The financial centre initiative Frankfurt Main Finance e.V. welcomes three new members. CRIF Bürgel, Deloitte Deutschland, and European DataWarehouse join the initiative as sustaining members.

“We bid our new members a very warm welcome! With their added support and the support of our long-standing members, we work towards the sustainability and efficiency of the Financial Centre Frankfurt. Our joint efforts significantly benefit the financial centre and have a lasting, positive impact on its worldwide prominence and reach,” says Dr. Lutz Raettig, President of Frankfurt Main Finance.

“Just like CRIF Bürgel, Frankfurt Main Finance stands for openness to innovation. We are, therefore, extremely pleased about our membership and future cooperation with an excellent network within the financial industry. Frankfurt has not only established itself as the leading financial centre in Germany through the strong concentration of financial firms, but is also one of the most important financial centres in the world. We will endeavour to make the best possible use of the resulting synergies with Frankfurt Main Finance and the other members, so that Frankfurt can continue to consolidate its pole position in the financial market. In line with our strategy, we also look forward to the collaboration and contact with one of the most progressive international FinTech hubs,” comments Christian Bock, Managing Director of CRIF Bürgel.

“As Germany’s leading financial centre, Frankfurt is one of Deloitte’s largest and most important locations. The membership in Frankfurt Main Finance fills us with eager anticipation of a noticeable deepening in our relationships with all actors in the financial metropolis. We are certain that our work can provide the Frankfurt community not only with many important stimuli, as it has in the past, but also with many benefits,” says Prof. Dr. Carl-Friedrich Leuschner, Deloitte auditor and partner. Head of Banking Practice at Deloitte Hans-Jürgen Walter adds, “Deloitte has supported the development of the Financial Centre Frankfurt in the competition between European and global financial centres for many years. In addition to the European Competence Centre for the Banking Union, Deloitte is also active in a number of initiatives with banks, associations, universities and politics with the goal of strengthening Germany’s most important financial centre. Membership in Frankfurt Main Finance is an additional resolute and active step in this direction, which includes, in particular, the further development of Frankfurt as an attractive location for the start-up and FinTech community.”

Dr. Christian Thun, Managing Director of European DataWarehouse, emphasises his excitement at the prospect of working with Frankfurt’s financial centre initiative. “We see our membership in Frankfurt Main Finance as a commitment to the Financial Centre Frankfurt, to which we owe a great deal and whose development we aim to pursue and actively shape with the keenest interest. Frankfurt Main Finance provides us with the requisite platform to do this, and we look forward to the exchange with the fellow members and market participants.”

CFS Index on the rise

Financial industry reports: Strong growth in revenue and earnings / Fewer jobs cut at financial institutions

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, rises by 4.3 points to 114.2 points. This positive development can primarily be attributed to high revenue and earnings growth in the financial industry in the fourth quarter of 2019. The investment volume among the financial institutions has also risen, while job cuts are lower than in the previous quarter. This positive news is offset by slightly slower growth in the investment volume and employee numbers among the service providers.

“Despite all gloomy prophecies the quarterly financial results of sector firms, both banks and financial service firms, are pointing northwards. This is even more true for numbers expected in the subsequent quarter” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany continues to consolidate, as in previous quarters. With a change of -1.7 points, this indicator is now at a moderate level of 117.0 points. The financial institutions and service providers are unanimous in this assessment.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V., explains: “The Financial Centre Frankfurt will gain in importance due to the Brexit. This development is not self-fulfilling, but rather requires the continuous effort of all parties involved. The further consolidation of the index should be a clear signal and incentive for all responsible persons to continue and intensify their commitment to the financial centre.”

Financial industry revenues and earnings rise

The surveyed financial institutions and service providers surpassed their expected growth in revenues/business volume in the final quarter of 2019. The corresponding sub-index for the financial institutions rises by 5.9 points to 120.6 points, which is 7.9 points higher than one year ago. For the service providers, the sub-index climbs as much as 9.7 points. It is now 1.5 points higher than one year ago, at 122.4 points. The financial institutions are anticipating a decline in the current quarter, whereas the service providers expect to see a slight further increase.

The earnings of both groups also developed very positively in the fourth quarter of 2019. The corresponding sub-index for the financial institutions gains 7.9 points to reach a level of 111.4 points. The huge growth recorded by the service providers substantially exceeds even their positive outlook from the prior quarter. The sub-index for this group rises by 14.4 points to 122.8 points. The financial institutions and service providers are expecting the growth to weaken again in the current quarter.

Growth in investment volume is positive among financial institutions / Slight decline among service providers

The growth in investment volume in product and process innovations among the financial institutions climbs 2.9 points to 108.6 points in the fourth quarter of 2019, yet still remains 3.4 points below the level of one year ago. By contrast, the sub-index for the service providers sees a slight decline of -1.5 points to 112.6 points, which is the same level as one year ago. The financial industry has an optimistic outlook for investment in the first quarter of 2020.

Fewer job cuts at financial institutions

Job cuts at the financial institutions, which have been ongoing for some time, were less severe than expected in the prior quarter. The employee numbers sub-index rises accordingly by 4.1 points to 94.5 points, which is 6 points higher than one year ago. The financial institutions expect to further curtail their job cuts in the current quarter. The service providers are hiring fewer new employees than in the previous quarters, though the numbers remain positive. The corresponding sub-index falls by -2.6 points to 106.1 points. Compared to last year, this is 5.4 points lower, meaning fewer people are being hired. The service providers are anticipating a clearly more positive development in the current quarter.

 

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.

CFS survey: “Outlook for the year 2020”

German financial industry expects more widespread adoption of negative interest rates for savers – Calls for stronger incentives for share ownership

Low interest rates and share ownership 

A CFS survey of financial industry executives shows that over 90% of respondents do not expect the ECB to change its monetary policy this year. Therefore, most financial experts (again over 90%) assume that the trend of banks introducing negative interest rates or deposit fees for savers will continue. Given the profound consequences for private pensions, a clear majority of those surveyed (approx. 87%) advocate stronger incentives for share ownership for the purpose of retirement planning.

“The proportion of people who own stocks or stock funds has increased in recent years. Nevertheless, only around one in six people currently invest in stocks,” says Professor Volker Brühl, Managing Director of the Center for Financial Studies. “The financial transaction tax proposed by Finance Minister Olaf Scholz would therefore be counterproductive.”

The respondents are split on the question of whether the government should adopt measures to protect retail savers against negative interest rates. This course of action is supported by 51% of the financial industry executives.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes that “the lack of an investment culture in Germany has been criticized for decades. If there is anything positive to be gained from negative interest rates from the investors’ point of view, it is that equity investment must now become the pillar of private pension provisions in order to avoid capital losses.”

Growth prospects and balancing the budget

Furthermore, the CFS survey makes it clear that the majority of the financial industry is not expecting a slump in economic growth this year, despite continuing uncertainties over trade disputes and geopolitical risks. Approximately 51% of those surveyed regard the federal government’s forecast of approximately 0.6% GDP growth in Germany as realistic.

The issue of balancing the federal budget is also provoking considerable debate in the financial industry. A majority of 54% are in favour of temporarily running a deficit to boost public investment or provide tax relief. 44% of respondents are opposed to this.

“The survey results show that there is no clear consensus in the financial sector regarding either the economic outlook or the need to shore up the economy with fiscal policy measures,” explains Professor Brühl.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., adds that “the opinion reflects the delicate situation of the very open German economy. On one hand, a record foreign trade surplus, on the other a pandemic, whose course endangers value chains, which are already stressed by Brexit and the yet to be completely resolved trade conflict between the United States of America and China.”

 

 

The results are based on a quarterly management survey in the German financial sector.

The Center for Financial Studies (CFS) conducts independent and internationally-oriented research in important areas of Financial and Monetary Economics, ranging from Monetary Policy and Financial Stability, Household Finance and Retail Banking to Corporate Finance and Financial Markets. CFS is also a contributor to policy debates and policy analyses, building upon relevant findings in its research areas. In providing a platform for research and policy advice, CFS relies on its international network among academics, the financial industry and central banks in Europe and beyond.