Eschborn for Business explores an interesting range of topics – Location Magazine 2019

The 2019 edition of the magazine Eschborn for Business has been published. This year’s bilingual magazine, published annually by the Frankfurt Main Finance member, focuses not only on the title topic Pharmacy and Life Science as a growth industry in Eschborn, but also on the changes in the job market. Trainee marketing and the aspirations of the start-up scene play an important role here.

Pharma & Life Science: an efficient Health System for a balanced life

The importance of pharmacy and life science is growing – the healthcare sector has long been one of the main drivers of technological innovation. In this issue, you will find out why Eschborn is a key business location for pharmaceutical and life science activities in Hessen and what makes it particularly attractive for companies like Kaneka Pharma or Siemens Healthcare Diagnostics GmbH. “Hessen is one of the most efficient regions in Europe and is therefore also well ahead in international competition,” says Dr. Rainer Waldschmidt, CEO of Hessen Trade & Invest GmbH. The aim is to maintain and expand this innovative and fast-growing image of the region. Additional interesting interviews, reports and events on this title topic and the advantages of the city of Eschborn can be found on pages 6 through 9.

In addition to the ever more important health sector, marketing to junior staff and especially trainees are decisive factors for future-oriented transformations. This and the effects of economic networks are discussed in more detail in the section “Economy” (pages 20 to 37). The start-up economy is also attracting more attention. How the city of Eschborn, a Frankfurt Main Finance member, supports young companies and employers is also addressed in this section.

Diversity of the City of Eschborn

The magazine offers additional complex topics. How the compatibility of family life and career can be shaped in Eschborn and which improvements Mayor Mathias Geiger sees in the new exit off the A66, are examined more closely on pages 36 through 47.

The 2019 issue of Eschborn for Business also covers the various leisure activities. Find out more about restaurant recommendations or sports tips in the following articles.

  •  “Sports events for the whole family” – keeping the whole family on their toes
  • “Cosy Places, Ideas for Lunch Break” – Interesting Locations, Delicious Food
  • “With the job bike. Without traffic jams” – A cheap high-tech bicycle, also for leisure time
  • “Spectators from all over the world live” – The cycling classic Eschborn-Frankfurt

We hope you enjoy reading!

CFS Index shows a slight overall decline

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 0.4 points to 112.4 points. This slight overall decline must be examined in its individual components. The revenue growth of financial institutions developed positively in the first quarter. By contrast, the service providers report a sharp decline here, although their expectations for the second quarter remain positive. The earnings growth of the financial sector declined in the first quarter, but here too there is continued optimism for the current quarter. Growth in the investment volume of financial institutions remains constant, with service providers reporting an increase. As expected, the financial institutions cut jobs in the first quarter and expect to make further reductions in the second quarter. The service providers, on the other hand, report a slight increase in employee growth.

“The combination of stable investments and employee numbers with rising revenues and earnings reveals a slight overall positive trend in productivity in the financial sector,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is consolidating at a high level. The corresponding value falls by 3.6 points to 123.4 points. This decline is attributable to the assessment of the financial institutions. The relevant sub-index for this group is 14.8 points down on the previous quarter, at 113.2 points. Conversely, the assessment of the service providers is very positive. Their sub-index value rises by 7.7 points to 133.6 points.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V. emphasizes: “The prevailing opinion is that the Financial Centre Frankfurt will continue to grow in international importance. The slight decline of the index is just a logical reaction to the delay of Brexit.”

Revenue growth of financial institutions positive / Strong decline in revenue growth of service providers, although expectations remain positive

There are contrasting trends in the growth of revenues/business volume between the financial institutions and the service providers in the first quarter. The corresponding sub-index for the financial institutions rises by 2.3 points to 115.0 points, with further moderate growth anticipated. The revenues of the service providers are down 9.7 points on the previous quarter, at 111.2 points, although their expectations for the current quarter remain very positive.

Revenue growth declines, although optimism persists for the current quarter

Contrary to forecasts from the previous quarter, earnings growth declined in the first quarter. The financial institutions in particular find themselves in a weaker phase of growth, with the subindex falling by 7.5 points to 101.0 points, yet they expect the trend to turn positive in the current quarter. At 107.2 points, the sub-index of the service providers is 4.3 points below its level in the first quarter. As with their revenues, the service providers remain optimistic about their earnings performance in the current quarter.

Investment volume of financial institutions stable / Service providers report increase

The growth in investment volume in product and process innovations among the financial institutions is almost unchanged in the first quarter, at a moderate level of 112.0 points (-0.1 points). A slight decline in growth is expected in the second quarter. By contrast, the service providers report an increase in their investment volume in the first quarter. The sub-index rises by 2.6 points to 114.8 points. This level is expected to be maintained in the current quarter.

Increased job cuts at financial institutions / Slight upturn in employee growth among service providers

In line with expectations in previous quarters, the financial institutions are now cutting jobs. The employee numbers sub-index for the financial institutions fell accordingly by 4.3 points to 96.2 points. Further job cuts are expected in the second quarter. Growth in employee numbers among the service providers improved slightly. The corresponding sub-index rose by 0.9 points and is now at a healthy level of 112.4 points. The service providers anticipate further growth in the current quarter.

 

CFS survey on Green Finance

In light of the growing debate over climate change and its consequences, sustainability considerations are also taking on greater importance in the financial sector. Under the headings “Sustainable Finance” or “Green Finance”, numerous initiatives have been launched to address the financial sector’s contribution to attaining climate goals. A recent survey by the Center for Financial Studies showed that the majority of the German financial industry (64%) believes that the financial sector could play a supporting role in achieving climate goals. Indeed, 17% of respondents would even attribute a major role to the financial sector. By contrast, 18% of those surveyed do not regard the financial sector as relevant to the climate goals.

“I see great opportunities for the Financial Centre Frankfurt to profit from the growing trend towards sustainable financial products as well as from trading in emission rights,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the survey results.

Demand for sustainable investment products (e.g. green bonds) is on the rise. The majority of the financial industry (70%) believes that sustainability will be an important factor in how investors decide to allocate capital in the future. By contrast, 26% of respondents believe that sustainability considerations will not influence investment decisions.

On the issue of how much government influence should be exerted, the German financial industry is fairly unanimous (70%) that no government incentives such as tax relief should be offered for green bonds, nor should regulatory advantages such as lower capital requirements be granted to banks that do little or no business with companies harming the environment.

“Banking regulation should not be overloaded with climate policy goals. Firstly, the financial sector is already subject to a dense network of regulations. Secondly, looser capital requirements for environmentally friendly financing could lead to false incentives that jeopardize financial stability,” Professor Brühl adds.

Regarding the question of whether a company’s environmental impacts should be factored into banks’ corporate lending decisions (e.g. through ratings), opinions in the financial industry are rather divided. While 52% of respondents support this approach, 45% are opposed to it.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes: “The results clearly show that the time is ripe and sustainable products are in demand. In addition, they show that further government incentives are not necessary. This is an encouraging sign that today, sustainable products are already competitive.”

Highlighting the importance of a truly integrated financial market in Europe

Jacqueline Mills, Managing Director and Head of the AFME office in Frankfurt

Jacqueline Mills, Managing Director and Head of the AFME office in Frankfurt

In May, AFME will be holding its first conference on the topic of supervision and financial integration – here Jacqueline Mills, Managing Director and Head of the AFME office in Frankfurt, explains why AFME decided to expand its footprint in Frankfurt and what topics will be on the agenda of the conference.

In February 2017, you opened an office in the Financial Centre Frankfurt to expand AFME’s European presence. Why did you choose Frankfurt?

AFME decided to extend its European footprint into Frankfurt two years ago by opening the local office in order to deepen its relationships with some of the key EU institutions, including the SSM, ECB, and ESRB, hosted by the city. Our focus is on ECB banking supervision since  many of our members are primarily supervised by the ECB and the ECB is also a direct supervisor for a growing number of entities belonging to our members with headquarters outside the Eurozone. As the heart of German finance, Frankfurt also provides us with a base to engage with local regulators, such as the BaFIN and Bundesbank, as well as other European organisations like EIOPA which are based here.

 What are the goals of the AFME, especially with regards to Brexit?

 As a pan-European trade association, we are dedicated to the promotion of deep and liquid European capital markets. We have well-established relationships across the EU27 and the UK. AFME aims to act as a bridge between market participants and policymakers across Europe, drawing on our strong and long-standing relationships, our technical knowledge and fact-based work. Especially our work concerning  Brexit draws on that approach. In particular, we have focussed on ensuring the decision-making community is aware of the potential cliff edge or no deal risks of Brexit.  Our work has contributed to the EU27 and individual Member States, including the UK, addressing many, if not all, of these issues. Of course, uncertainty remains, and we aim to help our members navigate this. If and when the UK’s exit becomes better defined, we will – on behalf of our members – contribute to shaping the future relationship for financial services between the EU27 and UK.

What will be the main topics covered by the conference held on May 23rd, 2019? For which target group is it suitable?

AFME members’ businesses span accross multiple global regions, thus connecting end-users with sources of capital and liquidity. Yet, the global banking industry is increasingly confronted with fragmentation along national and regional lines, which creates unnecessary rigidity and costs. At European level, the economic benefits of a truly integrated market for financial services are well understood, but progress remains slow.

The conference, which is our first one held in Frankfurt, will therefore address the interplay between the EU’s various Banking and Capital Market Union projects.   Furthermore, we discuss how moving forward with these initiatives is key to having a truly integrated financial market in Europe. The conference will also identify practical suggestions for achieving the European supervisory framework necessary to support these mutually reinforcing goals and consider how to enable greater cross-border supervisory cooperation. We hope that the event will provide food for thought for the next Commission’s mandate.

Among the highlights on the agenda are keynote addresses from Dr Jörg Kukies, State Secretary, German Ministry of Finance and ECB Vice President, Luis de Guindos. We also have a vast range of speakers, including representatives from the FSB, EBA, ECB, UK PRA and the US Federal Reserve Board in addition to industry leaders from a variety of capital market businesses around Europe.

You can register to attend the conference here.

 

”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.