”Welcome to the German Capital Market“ – new video lecture for capital market professionals from abroad

Deutsche Börse’s Capital Markets Academy announced in a press release that it is offering a new video lecture for bankers and other capital market professionals from abroad. In 150 minutes, the participants are made familiar with the market structures and the legal framework of the German capital market.

The international markets share many similarities, nevertheless, each domestic market has its own special characteristics. The Capital Markets Academy’s new e-learning programme takes this up and is aimed at capital market professionals who are experienced in their home country but not familiar with the specific German conditions and regulations.

“Our video lecture offers a compact but precise introduction to bankers who are new to Germany and want to gain a good overview of the market structure as well as its rules and regulations,” explains Ulf Mayer, Head of Capital Markets Academy at Deutsche Börse.

The video lecture in English can be watched flexibly and independently of time and place. The content is divided into two parts: 1) market structure in Germany and 2) capital market law and regulation. The lecture lasts about two and a half hours and consists of ten chapters. The corresponding handouts can be downloaded. A certificate of attendance will be provided in the end.

Further information on the video lecture is available at www.academy.deutsche-boerse.com/e01.

The Capital Markets Academy is the training provider of Deutsche Börse Group. It offers first-hand stock market knowledge in interactive classroom events with a high practical relevance and digital learning formats. With a focus on trading, clearing and settlement, it is geared to the products and services offered by Deutsche Börse Group. Other financial market topics, such as the functioning of capital markets and new technologies such as blockchain, round off the offering.

For a future-proof financial system as a mainstay for competitiveness and employment in Germany – elements of a policy roadmap

“Germany, Europe and the world face a fundamental transformation, posing a challenge that will need to be mastered by all spheres of policy, business and society. In view of global warming, change is inevitable in order to secure the livelihoods of some ten billion people by the mid-21st century on a sustainable basis. Designing such change will ensure a transition into a climatically compatible and sustainable social order.” Read more

ECB Chief Economist concerned about “vicious circle”

Peter Praet, Executive Board Member and Chief Economist at the European Central Bank, worries about the impact of uncertainties in his address, “Maintaining Price Stability in the Euro Area.” The speech was held on February 20, 2019, at the 11th Financial Centre Breakfast, organized by Frankfurt Main Finance together with the Association of Foreign Banks in Germany, for an audience of more than 100 guests at the Deutsche Bundesbank. Since 2015, this event series has provided a platform for the finance industry’s top thought leaders to address the most pressing issues for the European and global finance sector. Read more

More Shareholders in Germany – Overcoming Missunderstandings and Desinterest

Misunderstandings, bad feelings and a significant level of desinterest prevent Germans from investing money into shares. Even historically low interest rates have not increased their interest in equity investments. This is the core result of this study conducted by Deutsches Aktieninstitut and Börse Stuttgart. The study also develops ideas how the reservations could be overcome. The biggest push would result from the system of old age provision.

Download here (german).

CFS Index Standardfragen

CFS Index falls slightly

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 1.2 points to 112.8 points in the fourth quarter of 2018. The slight downturn can be attributed to weaker growth in earnings along with relatively constant revenue growth in the financial industry as a whole. In addition, the service providers report significantly weaker growth in investment volume, in excess of the decline predicted in the previous quarter, and a lower number of employees are being hired. At the financial institutions, the investment volume rises slightly and, contrary to their expectations, employee numbers remain constant. However, job cuts are still expected in the current quarter.

“Are service providers more adaptable than banks? A year-on-year comparison points to this conclusion. Capital expenditure is rising among service providers and the number of employees is falling, whereas the situation is reversed at the banks: investments are on the decline, while the number of employees is stable. In light of the deteriorating earnings outlook, this raises the urgent question for banks as to how they will manage the necessary adjustment of capacities,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is rated positively

Notwithstanding the uncertainties surrounding the Brexit agreement, the financial industry continues to rate the future international importance of the Financial Centre Germany very positively. The corresponding sub-index shows a slight increase of 1.0 points to 127 points.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V., emphasizes: “For quite some time, the prevailing and well-founded conviction in the finance sector is that the Financial Centre Frankfurt will increase in international importance. The Index’s recent, slight increase most likely reflects the UK’s withdrawal from the EU, which draws nearer and becomes increasingly tangible with each passing day.”

Revenue growth in the financial sector largely unchanged / Earnings growth declines

Growth in revenues/business volume among the financial institutions is almost unchanged in the fourth quarter of 2018. The corresponding sub-index rises by 0.1 points to 112.7 points. A slight increase is forecast for the current quarter. The revenues of the service providers, at 120.9 points, are 2.8 points lower than in the previous quarter. The current level is expected to be maintained.

Earnings growth is on the decline among both groups. The sub-index for the financial institutions falls by 3.1 points to 108.5 points, yet still remains at a solid level. As previously anticipated, the service providers record a more significant decline of 4.8 points to 111.5 points. Both groups expect to see a slight increase in the current quarter.

Investment volume of financial institutions remains constant / Sharper decline than expected among service providers

The growth in investment volume in product and process innovations at the financial institutions reveals a slight increase of 1.3 points and remains at a moderate level of 112.1 points. No significant change is expected in the first quarter of 2019. By contrast, the service providers report a considerable decline in the fourth quarter, in excess of the decline predicted in the previous quarter. The sub-index falls accordingly by 6.7 points to 112.2 points. The service providers expect to correct this decline again in the current quarter.

Despite expected job cuts, financial institutions keep number of employees constant / Service providers hire fewer employees

The employee numbers sub-index for the financial institutions rises by 0.4 points and, as in the prior quarter, signals a neutral sentiment with 100.5 points. As previously expected, the growth in personnel among the service providers continues to slow. Despite falling by 6.4 points, the corresponding sub-index remains at a good level of 111.5 points. For the current quarter, the service providers expect to be able to maintain this level of employee growth. The financial institutions, on the other hand, continue to forecast job cuts.

 

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 Index Sonderfragen

CFS survey: Majority of German financial sector expecting “no-deal Brexit”

The United Kingdom’s legally binding withdrawal from the EU is due to take place on 29 March 2019. Due to disagreements over the nature of a withdrawal agreement, there is the potential for a disorderly “no-deal” Brexit.

Aside from the potential consequences of a no-deal Brexit, a recent survey by the Center for Financial Studies revealed that the majority of the German financial industry (66% of respondents) feels that the EU should not make any further concessions, even though almost half of respondents (46%) are expecting a no-deal Brexit. 52%, on the other hand, expect the outcome of the dispute to be less severe.

While 51% of respondents do not believe that financial institutions in Germany are prepared for all scenarios, including a no-deal Brexit, 46% consider the German financial industry to be adequately prepared.

“Certain parts of the financial sector have placed too much confidence in an orderly Brexit. This could lead to market turbulence if indeed no deal is reached,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the survey results.

Since the British rejected the EU’s proposal for a withdrawal agreement in January, concerns over the implications of a no-deal Brexit have grown considerably. With the consequences of Brexit being so difficult to predict, the German financial sector is in firm agreement (83%) that the Financial Centre Germany would derive less benefit from a no-deal Brexit than from an orderly Brexit.

“It is not only the financial sector that requires reliable frameworks. A disorderly Brexit will lead to great uncertainty on the markets, hinder investment decisions and cost many jobs,” Professor Brühl adds.

In case of a no-deal Brexit, London will most likely be unable to maintain its position as the most important European financial centre in the medium to long term. 57% of respondents agree on this point.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes: “The importance of the Financial Centre Frankfurt has increased due to Brexit. The distribution of business units will be realigned throughout Europe’s financial centres, competition will be tough, but without London it will also not work in the future either.”

 

 

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.

PIC Galper, Josh Finadium_neu

“Collateral is an unusual asset class”

On February 21st, the Business of Collateral Trading conference will be held in Frankfurt. Frankfurt Main Finance talked to Josh Galper, Managing Principal of the organizing institution Finadium, a the global specialist consultancy on securities finance, collateral and derivatives, about the idea of the conference and why he decided to hold it in Frankfurt. Read more

Stock market breakfast

Stock market breakfast on the trading floor with Burkhard Balz, Board Member of the Deutsche Bundesbank

The stock market breakfast on the trading floor of the Frankfurt Stock Exchange has become a unique communication platform for financial market players. The event series aims at strengthening relations between all participants by facilitating an informal exchange. Keynote speaker Burkhard Balz, Board Member of the Deutsche Bundesbank, emphasised this in his speech Economic Education – Challenge and Tasks for Everyone in the Financial Centre at the stock exchange breakfast on Thursday morning. According to Balz, Financial actors at the Financial Centre regularly exchanging ideas is necessary to ensure the success of measures taken.

While December is usually filled with end-of-year-reviews, the recent stock market breakfast focused on the future: Keynote speaker Burkhard Balz highlighted the importance of increasing economic education. The Bundesbank has already provided numerous lectures and materials online. With having organised 400 lectures, the Museum of Money is an integral part of that educational work. The Bundesbank’s position paper “Sharing central bank knowledge” – the Deutsche Bundesbank’s economic education activities“ summarises the core ideas of ​​the Bundesbank’s educational program. The desired outcome of that program are economically aware citizens: people who have the knowledge, abilities, skills and attitudes, to manage everyday situations in which economics play a role and have answers to questions concerning economic issues. This applies to personal finances as well as to economic and financial matters at the corporate, national and international level. Additionally, the media bears the responsibility to report on economic issues, said Burkhard Balz in his speech.

The discussion of the stock market breakfast goes beyond the trading floor

By commenting on a Frankfurt Main Finance Tweet concerning the stock market breakfast, Marc Richter, Senior Trader Equities Frankfurt at Baader Bank AG, highlighted another aspect of the debate on economic education: “Likewise, economic education in schools should be of further focus.” A statement Sven Schumann, Director – Head of Section Community Relations & Initiatives of the Deutsche Börse, showed agreement to with a like – the stock exchange breakfast does not only guarantee for an exchange of ideas but also facilitates an (online) discussion.

Here you will find further follow-up reports to the event series:

Apr 2018: „Economic success is a necessary stage of transition if you want to be physically successful”: Axel Hellmann at the stock exchange breakfast on the Frankfurt Stock Exchange Parquet (german article)

24. May 2017: Stock market breakfast on the floor with Hauke Stars (german article)

CFS-Index takes a clear downturn

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 4.5 points to 113.9 points in the third quarter of 2018. The significant decline is primarily due to weaker growth in earnings and employee numbers among service providers as well as slower growth in revenues and investment volume throughout the financial sector. Among the financial institutions, however, the downturn in revenue growth is offset by an increase in earnings, while sentiment regarding employee numbers is neutral.

“Given the contrary trends in the earnings of banks and service providers – rising for the former, falling for the latter – the question arises as to why their investment behaviour is so similar. It appears that macroeconomic and political uncertainties (Brexit, Italy, USA, China) are the primary cause of the slowdown in investment,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is still rated positively, albeit to a lesser degree.

Since the Brexit vote in 2016, the future international importance of the Financial Centre Germany had been rated at historically high levels. In the third quarter of 2018, the corresponding figure of 126 points remains at a good level, despite recording a significant decline of -5.3 points.

“The downward trend in the assessment of Germany’s future international significance as a financial centre is seeing the glass half empty. In recent months, other financial centres in the European Union have indeed also benefited from Brexit. In this context, the positive developments in Frankfurt could seem less significant,” comments Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., on the survey results. “But when you look at it closely, the decisions by more than 30 financial institutions to move their European headquarters to Frankfurt speak for themselves. In 2019, the Financial Centre Frankfurt will gain considerably in international importance.”

Financial industry revenue growth declines / Positive earnings growth among financial institutions, negative among service providers

As forecast by the financial institutions in the previous quarter, growth in revenues/business volume declined in the third quarter. The corresponding sub-index for the financial institutions falls by 6.1 points to 112.7 points. Service provider revenues are 5.3 points down on the previous quarter at 123.7 points. Both groups are anticipating a further slight decline in the current quarter.

There is a stark contrast between the earnings growth of the two groups. After a weak second quarter, the financial institutions have returned to a good level. The corresponding sub-index rose by 9.8 points to 111.6 points. The service providers, on the other hand, recorded a sharp decline of 11.3 points to 116.3 points. For the current quarter, both groups expect a slight decline in their earnings growth.

Investment volume down

Contrary to expectations, the growth in investment volume in product and process innovations at the financial institutions fell by 5.3 points to 110.8 points. This low level is expected to persist in the current quarter. The sub-index for the service providers also fell by 3.4 points, though at 118.9 points it still remains at its third-highest level since the surveys began in 2007. However, a further downturn is expected in the current quarter.

Financial institutions show neutral sentiment on employee numbers

After the brief period of job cuts at the financial institutions in the second quarter, the employee numbers sub-index rises by 3.6 points and now signals a neutral sentiment at 100.1 points. As expected, the growth in employee numbers at the service providers has slowed. However, even after falling by 8.4 points, the corresponding sub-index remains at a good level of 117.9 points. As for the current quarter, the service providers expect employee growth to decline further, while the financial institutions are forecasting job cuts.

 

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: Artificial intelligence will be one of the core topics of the financial industry in the future

CFS survey: Artificial intelligence will be one of the core topics of the financial industry in the future – More initiatives to inform and educate the public would be beneficial

The German government has decided to invest three billion euros in the funding of artificial intelligence (AI) by 2025. There are also talks planned with the federal states and partners from industry to stimulate further investment. The main goals include making Germany and Europe a leading location for AI technologies and ensuring future competitiveness.

Despite the positive signals from the German government, a recent survey by the Center for Financial Studies found that the majority of the German financial industry (84% of respondents) doubts that most decision-makers in business and politics are precisely aware of the importance of artificial intelligence. Digitalisation in general and AI in particular are terms frequently employed in public discussions, although many people have only a vague idea of what these topics entail. Given the importance of these trends, a clear majority (86%) of the German financial sector is in favour of an initiative to inform and educate the public.

“We are living in a time of dramatic changes in the economy and the world of work. It is therefore essential to inform and educate people of all ages appropriately. I would like us to not only focus on schools, but to develop formats for adult education to address these key future topics,” said Professor Volker Brühl, Managing Director of the Center for Financial Studies, commenting on the survey results.

Artificial intelligence is very likely to revolutionise a whole range of industries over the next 10 years – 83% of respondents are convinced of this. Only 17% think that the importance of AI technologies is overestimated.

The financial sector is already heavily influenced by artificial intelligence, and the new technology has the potential to transform financial processes. Accordingly, 90% of German financial industry respondents said they expect AI technologies to be one of the core topics for their industry in the future.

“German banks must make substantial efforts if they are not to lose out in the field of artificial intelligence. Only a few banks are pursuing a genuine AI strategy today,” Professor Brühl adds.

When asked about the key future areas of application for AI in banking, 77% of respondents cited central functions (risk management, controlling etc.), closely followed by asset management (76%) and retail banking (73%). In addition, 53% mentioned the capital markets business. Only 36% of respondents regard corporate banking as a relevant area of application.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., underlines: “When it comes to AI, in international comparison the gap is enormous. According to a survey by management consultants Asgard and Roland Berger, there are only 106 AI start-ups in Germany compared with 383 in China or around 1,400 in the USA. The German government’s program is late to the game, but not too late. In order to catch up, it is now necessary to cooperate intelligently with start-ups and join forces in the Financial Centre Frankfurt.”

 

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.