CFS survey: One year on from the Brexit referendum

Financial industry still sees Frankfurt as the major winner / London to remain one of the top 3 financial centres / CFS warns against euphoria

According to a recent survey by the Center for Financial Studies, one year on from the Brexit referendum, a clearmajority of the German financial industry (86%) still believe that Frankfurt is the EU location that stands to benefit the most from Brexit. In addition, over two thirds of the companies surveyed (69%) expect London to remain one of the top 3 financial centres worldwide, even 10 years after Brexit. Only 14% of respondents believe one of the rival financial centres will emerge as the major winner. In this respect, the survey participants have more confidence in Paris and Dublin, whereas Luxemburg and Amsterdam are hardly expected to gain any significant location advantage.

“The survey underlines the particularly high expectations placed on Frankfurt to take advantage of Brexit. However, I would warn against getting carried away with the euphoria. Competition is very intense, especially with Paris. Substantial efforts are required on the part of the German and Hessian state governments, not forgetting the city of Frankfurt, to actually realise this potential,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the results.

The German financial industry is also united in its optimistic view on the specific question of how many extra financial sector jobs are likely to result from Brexit over the next five years in the Financial Centre Frankfurt. Of the survey respondents, 21% expect more than ten thousand additional positions to be created. Frankfurt Main Finance has viewed this as a realistic figure ever since the day of the referendum in the UK and expects a thousand new jobs to already be announced by the end of the current year. However, a larger proportion ofrespondents (45%) anticipate a figure in the range of five to ten thousand extra jobs. A further 33% predict between one to five thousand new jobs. Just 1% anticipate fewer than one thousand additional positions.

“Even if the Financial Centre Frankfurt hastaken the pole position, there are still around one hundred banks in London which are looking for a new home in the Eurozone. Only around twenty have made decisions. There is still a great deal to be done,” comments Hubertus Väth, Managing Director of Frankfurt Main Finance e.V..

Financial institutions in London are preparing to shift partsof their business from London to Continental Europe. When asked which region those institutions likely to shift the most jobs come from, 37% of respondents pointed to North America; 30% believe European firms will relocate the most jobs; 19% named the UK and 14% the Asia-Pacific region (APAC).

On the same topic, the majority of the financial industry (71%) anticipates a substantial relocation of jobsin the area of securities trading and settlement, followed by corporate finance and corporate banking (49%). In addition, 40% of respondents named the area of risk management and compliance. As for the asset management segment, 30% of respondents believe a substantial shift of jobs is realistic.

“In many quarters the potential relocation of the European Banking Authority (EBA) to Frankfurt is regarded as an important signal. Aside from proximity to the European Central Bank (ECB) being a pull factor in such location choices, the importance of the future home of the EBA is overplayed when it comes to location decisions of financial institutions. Issues of market access and infrastructure play a far more important role here,” said Professor Volker Brühl, Managing Director of the Center for Financial Studies, analysing the survey results.

CFS Index falls by 2.0 points

Revenue and earnings growth of financial institutions declines – Service providers expect the same for the current quarter / Financial industry continues to increase investment volume

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 2.0 points to 111.6 points. The declining rate of growth is primarily a result of smaller increases in revenues and earnings among the financial institutions. The service providers are expecting a similar development in the current quarter. On the contrary, the service providers inparticular report positive growth in investment. In addition, the financial institutions are continuing to reduce their job cuts and now, after implementing major personnel measures in the previous quarters, indicate an almost neutral business sentiment of 99 points.

“It is perhaps still too early to speak of a trend, but there is a growing impression that the financial institutions are making a comeback. Over several quarters now we can observe a constant pattern: increasingly positive expectations among the financial institutions coupled with decreasing values among the service providers – and this goes for all four components of the index: revenues, earnings, investment and employees,” 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 even more positively than just after the Brexit vote one year ago

The future international importance of the Financial Centre Germany, which has been rated very positively since the Brexit vote, rises by another 3.7 points in the third quarter of 2017 and now stands at 138.7 points, exceeding the previous high (136.8 points) reached shortly after the Brexit vote.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V. emphasizes: “We have already achieved quite a bit through our combined efforts. The Hessian government’s coordinated approach made a significant contribution towards our shared successes.”

Financial institutions record sharper decline in revenue growth, service providers are expecting the same for the current quarter

Growth in revenues/business volume in the financial industry is declining, but remains at a positive level. Among the financial institutions, in particular, this sub-index drops by 7.5 points to 106.4 points. The service providers record a smaller decline of 2.1 points and remain at a very good level of 124.5 points. For the current quarter, however, they are anticipating a sharper decline in growth, whereas the financial institutions expect revenue growth to begin to rise again.

Earnings growth of financial institutions falls back to first quarter level

The surveyed financial institutions are not able to maintain their strong earnings performance of the second quarter. The corresponding sub-index falls by 7.1 points to 105.4 points. However, they are expecting a rise in earnings growth in the current quarter. Among the service providers, earnings growth remains almost unchanged. The sub-index rises by 0.7 points to 118.6 points. However, a relatively sharp decline is predicted for the current quarter.

Investment volume among service providers reaches highest level since the survey began in 2007

The growth in investment volume in product and process innovations among the service providers rises by 11.7 points to a historic high of 123.5 points, though this is expected to decline significantly in the current quarter. The corresponding sub-index for the financial institutions also rises by 3.1 points to 116.7 points, and another sharper increase is expected for the current quarter. Both groups are therefore maintaining a very good level of investment.

Financial institutions continue to curtail job cuts

As observed since the start of the year, the trend among financial institutions to curtail job cuts continues. The corresponding employee numbers sub-index rises by 1.5 points to 99.0 points, which means it has almost reached the neutral level of 100 points. Regarding the current quarter, the financial institutions are expecting job cuts to increase slightly once more. By contrast, the service providers continue with a strong level of recruitment. The corresponding sub-index rises by 5.0 points to 118.6 points. However, the service providers are more pessimistic about the current quarter and expect weaker growth in recruitment.

Deutsche Börse launches new online platform to inform about stock exchange trading

Explaining complex issues about the stock exchange – that’s the goal now being pursued by Deutsche Börse AG with consumer-oriented videos for both beginners and the more experienced.

Many Germans shy away from making any financial investment in shares. This is the finding of a representative study on shareholder culture in Germany conducted in January 2017. The main reason that emerged for this, in addition to a lack of financial resources and a great need for security and peace of mind, is the low level of awareness and knowledge about the subject of stocks and shares. Deutsche Börse has also recognised this deficit and has now published ten short basic videos in German on its website that are intended to educate the wider public about the stock exchange. “Germany is still a developing country when it comes to understanding stock exchange trading and investing in securities,” said Nicolas Nonnenmacher, who is also responsible for the Capital Markets Academy in his capacity as Head of Community Development at Deutsche Börse AG. “The general public looks askance at the idea of building up capital through equities and securities without having looked into the subject to an appropriate degree. Our new portal accompanies beginners on their path to the stock exchange, and also provides advanced investors with high-quality content to effectively turn themselves into stock exchange professionals.”

In the explanatory videos, the two actors Anna and Michael show viewers, for example, how to open a securities account or portfolio, what to bear in mind when selecting shares, and how stock exchange trading works in practice. The films last between 20 and 30 minutes. In the video lectures, acknowledged stock market experts explain the basics about the financial markets and exchange trading. Under the second rubric “Stock market products in detail”, experienced investors learn the functions and special features of individual types of securities in extensive online courses about exchange-traded funds (ETFs) and structured products. The free registration creates a personal learning account that documents individual learning progress; learning units can be picked up again at exactly the point where they were stopped. The German technical inspectorate TÜV Rheinland was a partner in developing the portal.

Copyright: Deutsche Börse

Michael Rüdiger, new Chairman of the Exchange Council

Michael Rüdiger is the new Chairman of the Exchange Council. The DekaBank CEO takes over from Lars Hille, DZ Bank.

Michael Rüdiger was unanimously elected as the new Chairman of the Exchange Council of the Frankfurt Stock Exchange on June 1st. Rüdiger is CEO of DekaBank Deutsche Girozentrale and has been a member of the body since December 1st, 2016, where he represents the public-sector credit institutions. Rüdiger takes over this office from Lars Hille, who, as Executive Board member of the DZ Bank, had succeeded the long-standing Chairman Lutz Raettig in January 2017. Since Hille will be leaving the DZ Bank at his own request in October 2017, a new appointment for this important position on the Exchange Council became necessary.

The Exchange Council is a forum for discussing key issues and developments at the Frankfurt Stock Exchange; its approval is required for all decisions of fundamental importance. Among other things, the Exchange Council is responsible for the appointment, withdrawal and supervision of the executive management. Furthermore, it issues the Exchange Rules, the Fee Regulations and the Conditions for Transactions on the Exchange. The Exchange Council has 18 members, who were most recently elected on December 1st, 2016 for a term of three years.

Copyright: DekaBank Deutsche Girozentrale

Research conference: measuring systemic risks

Scientists and practitioners discuss different approaches: This year’s Research Conference of the Frankfurt Institute for Risk Management and Regulation (FIRM) has focused on approaches to identify and measure systemic risks. More than 50 representatives from the domain of science and practice discussed new models from the research community on June 22nd in Mainz and tested these against the requirements of everyday application within the Banks.

Prof. Dr. Günter Franke, Chairman of the FIRM Advisory Board, organised the conference and invited professors from various universities and academic disciplines to Mainz. Franke explains: “Our intention with this conference was to give practitioners an insight into current research approaches, some of which are still in the development phase, and to provide researchers with direct feedback from experienced practitioners about the feasibility of their models.”

Prof. Dr. Günter Franke: “Presenting new scientific insights and being able to discuss them with practitioners is the objective of the research conference.”

Günter Franke, the research conference organiser

Prof. Dr. Gunter Löffler from the University of Ulm started off the event. His formulation: can reliable information be derived from systemic risk measurements? He outlined his approach with two examples – CoVaR and MES (Marginal Expected Shortfall) – two common risk measures among experts where there are several pitfalls to be taken into account. One of them: the dimensions occasionally tend towards excessive simplification. In the estimation model the risk of the financial system is partly only traced back to the bank. Nor is there an analysis of who actually triggers a risk in a system. Both of these can lead to misinterpretations, which must be taken into account during application in the risk measurement and management, as Löffler told the practitioners.

Prof. Dr. Gunter Löffler: “Systemic risk factors can’t simply be applied without thought, but they’re for example a sensible addition to stress tests.”

Prof. Dr. Thilo Meyer-Brandis, a mathematics professor at the Ludwig Maximilian University of Munich, developed a network-based measure that maps the risk-bearing capacity of large financial systems with regards to contagious effects. He asked whether depending on the network structure capital requirements can be placed in such a way that a resistance of the system to risks can be derived. His model analysis assumes an initial shock and calculates what effects will arise for which bank in the network and how the shock will spread throughout the system. One of his findings: when a system is not robust, even a small shock is enough to trigger a collapse. On the basis of the model, however, every bank can understand for itself which capital requirement it has to meet to make the network resistant, Meyer-Brandis explained.

Prof. Dr. Thilo Meyer-Brandis: “We can derive explicit criteria that demonstrate the resilience of a network.”

Scientists in dialogue: Gunter Löffler, Thilo Meyer-Brandis and Simon Rother

All lectures were subsequently discussed by a practitioner and a scientist. For instance, Prof. Dr. Christian Koziol from the Eberhard Karls University of Tübingen explained how the mathematical approach from Meyer-Brandis can be complemented by the addition of an economic perspective. Jochen Peppel from the consultancy Oliver Wyman showed on the basis of the Meyer-Brandis dependencies model which factors can be applied for the stability of networks besides the directly financial factors, and how such factors can be linked. “This dialogue between science and practice is proving to be highly productive because it illustrates the wide range of different perspectives. That makes it easier for those taking part to inform their banking management with the new findings from the research community,” Franke maintained.

When talking about systemic risks, the impact of so-called asset price bubbles is also important. An empirical analysis presented by Simon Rother (Friedrich-Wilhelm University of Bonn) discussed the question of how price bubbles can become systemic risks. The subsequent discussion made it clear that the systemic risk already occurs during the development of such a bubble and that most players are also aware of this. The analysis can help to make a gut feeling quantifiable.

Prof. Dr. Jan Pieter Krahnen from the Goethe University in Frankfurt devoted his lecture to interbank intermediation in Germany. He built up a picture of interbank receivables and liabilities, broken down according to different deadlines. There’s no doubt, he insisted, that the interbank market could serve as an instrument for managing the interest rate risks of a bank. Prof. Lutz Johanning from the WHU – Otto Beisheim School of Management engaged in an intensive discussion about what role the interbank market can play for risk management in future. Michael Rab from the Raiffeisen Regional Bank Lower Austria-Vienna pointed out that interbank intermediation in Austria has been largely characterised by repo transactions since the last crisis.

Prof. Dr. Jan Pieter Krahnen: “We want to take a microscopic view of the interbank markets in Germany. Do they still have any meaning in the future – and if so, what are they?”

Jan Pieter Krahnen on the role of the interbank market

The event was rounded off by a lecture from practice. With the example of his own bank, Florian Roßwog from the DZ Bank concerned himself with liquidity control in extreme market situations. His analysis showed that liabilities to non-banks have gained in importance, unsecured financing in bank balances – apart from customer deposits – have been eliminated, and contractually agreed terms on the liabilities side have been shortened.

Florian Roßwog talked about liquidity management in practice.

Franke drew a positive conclusion at the end of the research conference: “The lectures on systemic risk have very clearly elaborated the different approaches to measurement, as well as their strengths and weaknesses. In addition, new insights were conveyed into the drivers of the interbank business.” In short, a real gain in insight for the participants.

Copyright: FIRM

One year after the UK referendum – a Brexit balance

The surprise came overnight, and there was a rude awakening. At 2 A.M., when the first forecasts were published, it still looked like Britain would remain in the European Union. But a next look at the news reports at 6:20 A.M. made it clear: the population of the UK decided to leave, even if the majority was only 52:48. A year has passed since TV cameras from all over the world stood in front of the ECB and journalists wanted to know what was now going to happen and what Frankfurt thinks about it all. London, Brussels and Berlin immersed themselves in consultations. Nigel Farage, the head of the UKIP party that had made Brexit its goal, stepped down. Shortly after, the British Prime Minister David Cameron followed suit.

Our message: Brexit is bad for the UK, it is bad for Europe, and it is bad for Germany. Frankfurt Main Finance (FMF), the voice of Germany’s financial centre, hoped for a different outcome to the referendum, but was also prepared for the results. When these came in, that was the moment to flick the switch. The campaign to promote and advertise our location on the River Main was ready and waiting: as soon as the official referendum result was announced, an information website about Frankfurt went online, a telephone hotline for questions about Brexit was activated, a statement was published on the FMF website, and a campaign started at the same time on Twitter and LinkedIn to spread the word about the merits and advantages of the Financial Centre Frankfurt. The message was clear and relevant: “Welcome to Frankfurt”.

 

Once-in-a-century chance for Frankfurt

On June 24th, interview requests came in from all over the world. The media struggled to understand what had happened and how it would be changing the world we live in. FMF gave interviews in 15-minute intervals: on the phone, in the microphone, on camera, and yet again on the phone… The Brexit vote dominated the news all around the globe. Being in a position to talk while others were still treading their way through channels of coordination and approval gave Frankfurt a key advantage right from the start.

Despite the obvious negative repercussions, Brexit brought the opportunity of a century for the city of Frankfurt and the region. The financial architecture of the European Union was, and up to now, is focused on London. The UK’s withdrawal from the EU – and that was clear straight away – would lead to a relocation of responsibilities and business in the direction of the EU, resulting in a more multipolar financial world. London will undoubtedly remain a major financial centre, but financial centres in the EU will gain enhanced influence – Frankfurt above all. We at Frankfurt Main Finance have never tired of pointing out that it’s not a question of weakening London as a financial centre through our efforts; rather, it’s primarily about installing a stable financial sector within the EU, about building a bridge between London and the EU that starts in Frankfurt.

EBA and Euro clearing are in focus

On day one after the referendum, FMF ventured to make the well-founded estimate of 10,000 jobs that Frankfurt could gain within five years as a result of Brexit – with two essential preconditions: the European Banking Authority (EBA) moves to Frankfurt, as does the lucrative euro clearing market. While the seat of the EBA quickly became a general topic of discussion, it took months before the exceptional importance of euro clearing became clear to the wider public – a rather unwieldy topic at first glance.

The processing of derivative transactions via central guarantee entities, so-called Central Counterparties, and their supervision by the regulator is one of the main ramifications of the financial crisis. When the financial world plunged into crisis, there was in part complete uncertainty as to where the risks were, i.e. who held the actual risks festering in their books at the time. This insecurity led to fear, and the resulting loss in confidence threatened a collapse of the entire system.

Euro clearing: Frankfurt is currently the only real alternative to London

The decision as to where euro clearing operations should be carried out has been recognised as one of the key decisions for shaping the future financial architecture of the EU and Europe, and the issue has been discussed in this vein. And once again, Frankfurt is justifiably confident that it can win the day as the location of choice. Today, in addition to London, only Frankfurt – with the EUREX Clearing subsidiary of Deutsche Börse AG – has a valid licence within the EU and possesses the technical prerequisites, tried and tested in daily operation, to take over euro clearing operations from the City of London. Currently, Frankfurt is already the market leader in the clearing of exchange-traded derivatives. On the other hand, London leads by far in the clearing of euro-denominated OTC derivatives.

This lucrative business will not be able to remain in London as it has. That’s something we stressed at the time and have stressed ever since. After all, the European Central Bank, directly after its founding, wanted the supervisory of such a critical key function for the stability of European financial markets and the euro in its sphere of influence and control. Already now, there are first signs of business moving to Frankfurt, and companies are increasingly testing the clearing opportunities in the Financial Centre Frankfurt.

More uncertainty in the wake of the UK elections

A lot has happened since June 23rd last year. To mention just a few milestones: the British Prime Minister at the time, David Cameron, resigned. He was succeeded by Theresa May. She, who for all intents and purposes counted among those in the remain camp, surprised everyone in her first policy address, with the wording used ever since to illustrate the British posture towards future negotiations with Brussels: “No deal is better than a bad deal.”

The so-called cliff-edge Brexit – the running out of the negotiations on withdrawal scheduled for two years without an agreement being reached – came into view and became the most probable outcome. On March 29th, 2017, the United Kingdom formally requested withdrawal pursuant to Article 50 of the Treaty on European Union. As a result, Theresa May set the countdown in motion for the two-year negotiation period. A few weeks later, she again shocked the world by calling new elections to the House of Commons for early June. The professed goal was to receive a strong mandate for negotiations with Brussels. The calculation didn’t pay off. May and her party are now weakened, with incalculable repercussions for the Brexit process, for financial market participants, and for financial centres.

Frankfurt and Germany offer stability

If, from a European point of view, the result of the UK parliamentary election is interpreted as “a glass half-full”, then a lot of things come into the range of possibility again: even a new referendum with an open end. And even the UK remaining in the EU is no longer completely out of the question, albeit hardly likely.

If we interpret the “glass as half empty”, we are then dealing with a weak government that is only capable of making a few compromises in the upcoming negotiations because it lacks a broad mandate and a robust majority in the UK Parliament. A breakdown of negotiations and even a new election within the two-year period are conceivable. The negotiation programme, which is already ambitious to say the least, seems simply impossible to complete. Extensions, interim solutions and deadlines will probably be the result.

One thing remains certain: the decisions made by companies and by the financial and the real economy, on both sides of the Channel, must now be made under an even greater cloud of uncertainty. This speaks for Frankfurt, and it underlines the strength of Germany and Frankfurt as a refuge of stability and predictability.

Frankfurt exploits its pole position

In a host of banks and across the financial sector, Frankfurt is frequently discussed as a potential candidate for the relocation of companies or divisions. Above all, the Financial Centre Frankfurt boasts a stable economy and stable pro-European political conditions, with an excellent infrastructure, a large number of well-trained workers – especially from the financial sector –, a relatively cheap rental index and cost of living, and a high quality of life.

Metaphorically speaking, all this has brought Frankfurt onto the pole position in the race for the chances in the wake of Brexit. And the Hessian metropolis has been doing full justice to its prominent role up to now. This is shown by the successes achieved so far. Already, a Chinese, Japanese, Indian, Korean and Swiss bank have decided in favour of Frankfurt as their main location in the EU. Goldman Sachs is planning to double its workforce in Frankfurt and Standard Chartered has recently announced its intention of expanding its office in Frankfurt due to Brexit. Around 20 banks are currently in the later stages of talks about either locating or expanding their operations in Frankfurt.

The metaphor of a race also makes another thing clear: the clear winner is uncertain until the finish line is crossed. Frankfurt must continue to promote its merits and advantages and continue to address its weaknesses, rising to the occasion to capitalize on the once-in-a-century chance before it. Ultimately, a number of financial centres will certainly profit from Brexit, but the Financial Centre Frankfurt has every opportunity to become the financial metropolis of the European Union.

“Better prepared” – a discussion with actors with Brexit responsibility in the Rhine-Main region

The starting signal was sounded a year ago: the British people decided in a referendum on June 23, 2016 in favour of the United Kingdom leaving the European Union and therefore set a process in motion that can already be described as historic. The consequences are so far-reaching that even accomplished experts can hardly gauge effectively how the interaction between the UK and the countries in the EU will change. Only one thing is certain: much of what has been considered certain up to now will be put to the test.

That also applies to the question as to where the financial centre of the European Union will in future be located. The place to be has been London up to now. The race for a successor has already started some time ago and the competition is tough: Amsterdam, Brussels, Dublin, Frankfurt, Luxembourg, Paris and Warsaw are all doing their best – each city in its own way – to become the hotspot of the international finance industry.

Long before the UK made its decision, Frankfurt made initial preparations: to have a voice and be articulate, to provide interested parties with considered answers, to seek dialogue – that is a fair description of what representatives from the Hesse state government and the Hessen Agentur /Hessen Trade & Invest as well as from Frankfurt Rhein Main and Frankfurt Main Finance have wanted to achieve from the outset. With success, as the round table discussion with their representatives shows: those taking part comprised Wolf-Dieter Adlhoch, Head of the Brexit Office in the Wiesbaden State Chancellery, Dr. Rainer Waldschmidt, Managing Director of Hessen Agentur/Hessen Trade & Invest, Eric Menges, Managing Director of Frankfurt Rhein Main GmbH, and Hubertus Väth, Managing Director of Frankfurt Main Finance.

After a year of intensive discussions about the Brexit: how has Frankfurt positioned itself to score points in the competition among European financial centres?

Dr. Rainer Waldschmidt: Communication was the key from the very beginning. As early as during the discussions about the referendum, we already started to bring together important representatives from city and state institutions around the table for talks so as to agree at a very early stage about the concerted action we should take. One important point, for example, was that we don’t focus on Frankfurt as a city, but talk about the Rhine-Main region, because many aspects relating to the issues of talent, infrastructure and quality of life gain their relevance from the circumstances and realities within this larger region.

Eric Menges: It helped us considerably that we had already programmed a complete website before the Brexit decision, which we were able to set up live on the morning the results were announced. That involved a certain risk: the effort might well have been in vain. But it meant we had betted on the right horse, even though we would have preferred the vote to go a different way. There was a massive interest in receiving up-to-date information from this point onwards, as you can imagine. Our swift action received a great deal of positive feedback, especially in the social media. The nicest comment was to the effect that here’s a region that seems better prepared than the rest of England. We allowed ourselves a wry smile on reading that.

Hubertus Väth: Alongside the website, there was also a Twitter and a LinkedIn campaign with a simple, clear-cut message: welcome. As early as 6.20 in the morning, the media were already on the phone and wanted to know whether, and in what way, Frankfurt was prepared. Since then, there have been around 500 inquiries from journalists from over 40 countries. Even now, no week goes by without two to three inquiries coming in.

What are the central messages? What do Frankfurt and the region have to offer?

Wolf-Dieter Adlhoch: There are undoubtedly a lot of hard facts that speak in favour of the Rhine-Main region. Already today we are one of the most important financial centres worldwide. All the major German banks and over 150 foreign banks are present in and around Frankfurt. The most important regulatory authorities, and first and foremost the ECB, are resident here. Another merit is that the German economy is strong and robust, and – more important than ever in times like these – we enjoy a high degree of political stability. The taxes in Germany are not as high as sometimes assumed; 30 percent on average for companies, that makes us competitive. Our labour law is flexible, fair and above all efficient. As far as infrastructure is concerned, our Frankfurt Airport makes us unbeatable …

Menges: I always like to point out that it’s as close as London’s City Airport and as efficient as Heathrow.

Adlhoch: It’s important to us, however, that we don’t just beat our own drum, but that we present objective arguments.

Väth: Three messages have been clearly heard: Europe still needs the international standing of the financial centre of London, which is why we don’t want to harm London as a financial location. We want to build bridges and not tear them down. And we want to work together effectively in future as well.

Menges: Yes, that’s true: we aren’t conducting any superficial advertising campaign, as other financial centres are indeed doing. We are talking with decision-makers in the companies. And many, very concrete questions have emerged that we didn’t at first have in such clear focus. One example: international schools. You can imagine that’s an important issue for employees who are to come to Frankfurt in future with their families. So we brought all the international schools in the region – more than 30 altogether in and around Frankfurt – together around a table and discussed with them whether they are ready in their structure or in their capacity planning to accommodate a large influx of new pupils. The answer is yes. The diversity of schooling options available is also impressive. Armed with such information, we then go back to our discussion partners and can usually answer their questions in all the necessary detail.

Waldschmidt: Available office space is also a topic that comes up again and again in discussions. That’s why we have surveyed the availability and quality of sites together with the local real estate brokers. Specifically: we have 750,000 square metres of vacant office space at the necessary quality level in the preferred inner-city area. Moreover, project development plans are showing a further increase in these A-grade premises. Consequently, we can take up all the people that serious forecasts suggest for the first wave of immigration caused by the Brexit. When we talk about such changes, things don’t happen overnight. Instead, we assume that three waves will take place, each with different regional effects. The first wave will directly impact the financial centre, and therefore Frankfurt and its immediate surroundings, at the very core. The second wave will involve the relocation of European headquarters, i.e. distribution and back office as well. The radius of impact will expand to take in the belt around Frankfurt. It’s only during the third wave that industry will be affected, and that’s where the whole of Hesse is of interest.

After a year, what are the most significant findings and what should be the focus of attention in future?

Väth: Although we have pole position, the race isn’t over yet. It’s too early to take a breather. Exogenous factors, such as a possible US tax reform, can still change crucial parameters to our disadvantage. We must also point out that the competitors are doing a good job and are achieving some success – for instance in the domain of insurance companies and asset managers. The question of the future of euro clearing will certainly be of great importance – and area where exciting days and weeks lie ahead of us. Here, too, we’ve already done a lot of educational work. But, having said all that, it’s also time to say thank you. Whether BaFin or the Bundesbank, the state government or national government – outstanding work is has been and is being carried out when it matters, and this doesn’t go unnoticed. It has also been remarkable just how many of our members have unselfishly contacted us and asked whether they can do anything for us. Needless to say, we didn’t say no and were able to get a number of things moving. Also noticeable was how actively new members approached us and said that they now understood why we are important and why it makes good sense to participate.

Adlhoch: We take the feedback we receive from the many individual discussions we hold as representatives of state government, of Hessen Agentur, Frankfurt Rhein Main and Frankfurt Main Finance very seriously. What is well received is the confidential dialogue, and that’s why our focus will remain in this area in future. What we will do more intensively is to organise a direct exchange with experts. This region is home not only to the banks and regulators, but also to all those lawyers and consulting companies that are so necessary for the financial industry. We clarify detailed questions about labour law, tax issues and regulatory aspects by mediating contacts and networking experts. One thing we won’t be doing is to promote the location with the help of short-sighted gifts – i.e. allowances, benefits or privileges. We are firmly convinced that as a region we have what we need to make our case effectively to companies and to help them make the right decision in their strategic location. Last but not least, this also applies to the quality of life. We’ve not spoken a lot about that today, but everyone familiar with the Rhine-Main region knows all too well that the spectrum of leisure and cultural activities on offer is really quite impressive.

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New Offer: Banking Business in Germany Seminar

“Banking Business in Germany – Relocating from London to Frankfurt” is the title of an information event that will provide financial services providers with valuable support in the relocation of business units (from London) to the Financial Centre Frankfurt. Well-known speakers, like Dr. Oliver Wagner (Association of Foreign Banks in Germany), Olaf Atja Lemmingson (Frankfurt Economic Development GmbH) and Eric Menges (FrankfurtRheinMain GmbH) will cover a wide range of topics: questions on supervision and regulation are to be addressed as well as employment aspects and general topics such as the housing market and schools. The organizer of the two-day event is Management Circle, whose flyer and website contain further details and dates.

Eschborn for Business

Upwardly Mobile: Eschborn for Business

The newest edition of the magazine Eschborn for Business is now available. The annual, bilingual magazine concentrates on the more than 30,000 employees and over 4,000 companies located in Eschborn, covering a wide range of commercial and economic developments in the city.

Some highlights:

  • “Upwardly Mobile” – cover article discusses the city’s commercial growth, new construction and the drivers behind this.
  • “A once-in-a-lifetime opportunity” – Frankfurt Main Finance Managing Director, Hubertus Väth explains how Brexit will positively impact the Frankfurt Rhein-Main Region and Eschborn.
  • “The most dynamic FinTech Hub” – The Frankfurt Rhein-Main Region is home to a booming FinTech ecosystem. Deutsche Börse, headquartered in Eschborn, is one of the movements biggest supporters.
  • “From London to Eschborn” – South Korean tech giant, LG has moved its European headquarters from London to Eschborn.

Eschborn: top location with high standard of living

Thanks to a combination of relevant business factors, the city of Eschborn, with its population of 21,000, has developed into an international and modern business hub. Ninety-five percent of the over 4,000 local businesses are service providers, primarily in the finance, IT, consultancy, and telecommunication sectors. About 80 high-tech companies have also settled in Eschborn, establishing the city as an important innovation hub in the FrankfurtRhineMain area.

The current edition of the Future Atlas published by the Prognos research institute ranked the Main-Taunus-area, spearheaded by Eschborn and its over 32,000 employees, 15th in its ranking of 402 German cities and administrative districts. Local companies benefit from the convenient infrastructure, the proximity to Frankfurt Airport and ICE train stations, from the business-friendly tax policy and Eschborn’s moderate lease and property prices. The location’s green surroundings, nestled in the foothills of the Taunus Mountains, add to its appealing high quality of life. There are attractive residential areas, committed schools, lots of sports facilities and parks, free-of-charge parking lots, and over 100 different clubs and cultural institutions that offer a wide range of leisure activities. In conclusion, Eschborn is a location that opens up promising perspectives for work and leisure.

Download the 2017 edition of Eschborn for Business!

Financial Centre Report

Building Bridges – Frankfurt and Europe after Brexit. The new Financial Centre Report from Frankfurt Main Finance

The new Financial Centre Report, Building Bridges – Frankfurt and Europe after Brexit, from Frankfurt Main Finance has just been released. Designed as a magazine, the Main Metropolis is presented from varying perspectives and demonstrates the city’s strengths and the distinct characteristics that set it apart. The first section of the report is devoted to the many facets of the Financial Centre Frankfurt. The second part of the report, Insights, analyzes economic issues and takes a critical look at the opportunities for the Financial Centre following Brexit.

In the forward from Hessian Minister for Economic Affairs, Tarek Al-Wazir, the minister recalls the rise of Frankfurt as the most important Financial Centre in Continental Europe. He points to the multitude of challenges the financial industry faces today. Reflecting on the demands on the industry to re-invent and re-establish itself through digitization. Helping to tackle these challenges is the thriving FinTech scene in the Rhine-Main region.

Another current challenge is coping with the reorientation of the European financial sector following and finding future oriented solutions for this. The title of the Financial Centre Report, Building Bridges, is born from this challenge. The report explains how Frankfurt and the Rhine-Main region are helping to future-proof the European Financial Sector and continue ensuring it can efficiently support the real economy.

The publication from Frankfurt Main Finance casts a spotlight on the Financial Centre Frankfurt and introduces insights that work together to paint an impressive and coherent picture. After the lighter, more personal look at the Main Metropolis in the first section, the following half delves into a fact-based analysis of the Financial Centre Frankfurt and the region. Readers will appreciate the careful exploration of the day’s pressing topics: What does Brexit mean for Frankfurt? The current and future relationship between the real economy and banks. What is the state of long-term financing and how will the German economy be affected by Brexit?