Brexit bankers bring more welfare effects to Financial Centre Frankfurt and the region than just their jobs

New jobs in the banking sector – this is the expected result of relocations from London to Frankfurt. Well-founded estimates speak of ten thousand additional jobs within the next four years. The overall increase in job growth associated with Brexit is significantly higher because multiplier effects cause growth in other industries as well, according to the findings of an academic study conducted by WHU – Otto Beisheim School of Management on behalf of Frankfurt Main Finance.

“We investigated the effects of the relocation of banking jobs as a result of Brexit on the entire labour market for the city of Frankfurt, the neighbouring cities and the Rhine-Main area,” says Prof. Dr. Lutz Johanning, one author of the study. “Our study shows that the multiplier effect is between 2.1 and 8.8, depending on the area examined. If we consider adding 10,000 new jobs in the banking industry over the next four years, then, according to our prudent estimate, an additional 21,000 jobs could be created in Frankfurt City. In the optimistic case, this could result in up to an additional 88,000 new jobs in the Rhine-Main region.”

Moritz C. Noll, co-author of the study, says, “With our models, we demonstrate that the long-term growth trajectory is changed by an initial shock, in other words, the additional jobs in the finance sector due to Brexit. Thus, we argue that the growth effects on the labour market can be significantly higher than the initial effects suggest. There’s still room for further gains.”

Hubertus Väth, Managing Director of Frankfurt Main Finance, says, “The job growth will further advance the economic strength of Frankfurt and the region. A real success story for all parties involved. Now, it is important to absorb and shape this growth positively. That is a challenge. However, the additional jobs also bring the funds to invest and master the challenge.”

Based on the assumption that 10,000 financial sector jobs will relocate to Frankfurt due to Brexit, this also results in additional tax revenues for the city of Frankfurt. In the conservative scenario, the net gain from income, value-added and local business taxes is around 136 million euros per year, while the optimistic scenario would yield nearly 192 million euros.

Winning Frankfurt: Brexit Bankers’ Welfare Effect Beyond Bringing Their Jobs

Frankfurt Main Finance supports Federal Ministry of Finance’s Bid to host EBA in Frankfurt

Today, the German Federal Ministry of Finance submitted their bid to host the European Banking Authority (EBA) in the Financial Centre Frankfurt. Currently located in London, EBA must find a new home as a result of the United Kingdom’s withdrawal from the European Union. Applications to host the agency were due to the European Commission on 31 July 2017. The final decision is expected in November 2017.

Frankfurt Main Finance supports the Federal Ministry of Finance’s bid to host EBA in the Financial Centre Frankfurt. “We commend the Ministry on submitting a strong application. Frankfurt is home to three of the five pillars of an integrated European financial supervisory system. To relocate EBA to Frankfurt would be the logical next step and in line with an earlier recommendation by MEPs,” explains Hubertus Väth, Managing Director of Frankfurt Main Finance. In addition to hosting the European Central Bank (ECB), European Insurance and Occupational Pensions Authority (EIOPA), and the European Systemic Risk Board (ESRB), Frankfurt is also home the Deutsche Bundesbank, the German Federal Financial Supervisory Authority (BaFin) and Federal Agency for Financial Market Stabilisation (FSMA).

The Financial Centre Frankfurt is in the pole position to win banking business from London following the results of the UK’s referendum. Several banks have announced their intentions to establish or expand operations in Frankfurt as a result of Brexit, including Silicon Valley Bank, Standard Chartered, Daiwa, Nomura, Sumitomo Mitsui Financial Group, Mizuho, Goldman Sachs, Citibank, JP Morgan and Deutsche Bank. “The banks have voted with their feet for Frankfurt, now it’s on Europe to vote for financial stability and for Frankfurt,” explains Väth. Frankfurt Main Finance expects at least 12 and possibly as many as 20 banks to announce their decision for a location in Frankfurt in 2017.

Noted for its strong economic and political stability, Frankfurt and the region offer a top infrastructure, competitively priced and plentiful modern office space, a deep talent pool and an extremely high quality of life. Financial services moving to Frankfurt will find a competent, helpful and welcoming regulator in BaFin, who will accept large portions of applications in English. The Financial Centre is already home to more than 150 foreign banks and 75,000 people employed in financial services.

Frankfurt becomes destination for international job seekers – HR consultants signal a clear spike in interest

Brexit is gaining momentum. Coinciding with the first official announcements from financial institutions moving business units from the Thames to the Main, movement is being observed in the labor market. “We are currently experiencing an unprecedented onslaught of unsolicited applications from London for the offices in Frankfurt,” said Christopher Schmitz, Partner, EY EMEIA Financial Services. “This is true for both internal applications from consultants from within the company, but also for external applicants, especially by people of Indian origin. The interest in Frankfurt is great.”

Dr. Rolf E. Stokburger, Managing Partner at Boyden, a global HR consultancy specializing in management, made a similar observation, “Senior bankers are among the more proactive applicants. They are eager to be part of the success story in Frankfurt and leverage the opportunities of early entry.”

Thomas Deininger, Managing Director of Deininger Consulting, a global consultancy headquartered in Frankfurt with offices in London, Dehli, Mumbai and Pune, amongst others, says, “London’s banks are behaving increasingly hesitant. Our contracts there have reduced dramatically and recruiting has declined by 30 to 50 percent. On the other hand, we have increased interest in Frankfurt. The number of unsolicited CVs has certainly increased by 20 percent. There are a lot of actors in the financial sector currently taking part in exploratory talks with us.”

“We are currently experiencing the early phases of an evolving, radical shift in Frankfurt’s labor market,” says Hubertus Väth, Managing Director of Frankfurt Main Finance. “Banks are now discussing with their teams how they implement relocations to Frankfurt,” Väth continued. “These decisions will be made well in advance and require months of preparations. This affects not only the employees, but also their families.”

The great interest in the Financial Centre Frankfurt from India is remarkable, but not surprising. According to data from the City of Frankfurt, the Indian community in the Rhine-Main region is by far the largest in Germany and the Orbis database shows more than 130 Indian companies in the region in 2017. It is the preferred investment destination for India within the Schengen zone. And not least, more than 40 Indian IT companies, 9 of the top 20 Indian IT companies, are based here.

“In our offices in Delhi, Mumbai and Pune, interest in working in Frankfurt is also increasing,” says Thomas Deininger. “The 2016 Global Innovation Index sees Frankfurt as a leading German innovation cluster at number 12 in the world, ahead of London (21) and Berlin (30). Frankfurt is a particularly attractive location for innovative companies,” adds Hubertus Väth.

Mizuho is fourth Japanese bank to confirm move to Frankfurt

The Japanese investment bank Mizuho Securities Co. Ltd., a core group company of Mizuho Financial Group, Inc., announced today that it has begun procedures to apply for a license to further expand its presence in the Financial Centre Frankfurt. In addition to Daiwa, Nomura, and Sumitomo Mitsui Financial Group, a fourth major Japanese bank has now decided to establish a hub in Frankfurt am Main.

“Frankfurt e yokoso, welcome to Frankfurt Mizuho! We see Mizuho’s decision as another show of trust in the Financial Centre Frankfurt, for which we are most grateful,” says Hubertus Väth, Managing Director of Frankfurt Main Finance. “Overall, Frankfurt’s many advantages create a convincing package. Now, four of the five leading Japanese banks and securities corporations have chosen Frankfurt for their European hubs after an extensive and thorough due diligence process. We look forward to supporting them in establishing their operations in any way possible.”

Väth futher explains that “the banks’ decisions to move their business from the Themes to the Main over the past few weeks, strengthen Frankfurt’s position as a significant financial centre, not only in Europe, but globally as well.” Frankfurt Main Finance expects at least twelve banks to announce their decision to relocate to the Financial Centre Frankfurt this year. “We are one step closer to our ambitious objective of having twenty banks placing their trust in the Financial Centre Frankfurt this year. The past weeks should alleviate any doubts concerning Frankfurt’s attractiveness to the world’s major investment banks,” says Väth.

The Financial Centre Frankfurt is in the pole position to win banking business from London following the results of the UK’s referendum. Noted for its strong economic and political stability, Frankfurt and the region offer a top infrastructure, competitively priced and plentiful modern office space, a deep talent pool and an extremely high quality of life. Financial services moving to Frankfurt will find a competent, helpful and welcoming regulator in BaFin, who will accept large portions of applications in English. The Financial Centre is already home to more than 150 foreign banks and 75,000 people employed in financial services.

The press release of Mizuho Financial Group.

 

the Financial Centre Frankfurt

Citigroup Leads Wave of American Banks Choosing the Financial Centre Frankfurt

American investment bank Citigroup is set to expand their operations in the Financial Centre Frankfurt as a result of the UK’s withdrawal from the EU. Initial reports indicate the investment bank will relocate several hundred sales and trading jobs to Frankfurt.

Frankfurt Main Finance (FMF) welcomes the news and is proud that Citigroup, one of the so called big five, has chosen to expand operations in the Financial Centre Frankfurt. Commenting on the news, FMF Managing Director Hubertus Väth said, “It is great news for the Financial Centre Frankfurt and we look forward to welcoming our new colleagues. Citi’s decision supports our estimates of an additional 1,000 jobs moving to the Financial Centre Frankfurt this year and 10,000 jobs coming in the next five years. The reported decision by Citi also reaffirms our confidence that at least twelve banks and perhaps as many as twenty will decide for Frankfurt this year.”

For the past year, the Financial Centre Frankfurt has been in concrete discussions with nearly twenty banks interested in moving operations to Frankfurt. “Last week, Jamie Dimon announced in Paris that JP Morgan will use Frankfurt as their legal base. This was a strong, first signal from the US banks. Following last week’s submissions to the Bank of England, we expect to see the next wave of announcements coming very soon,” Väth explains.

The Financial Centre Frankfurt is in the pole position to win banking business from London following the results of the UK’s referendum. Noted for its strong economic and political stability, Frankfurt and the region offer a top infrastructure, competitively priced and plentiful modern office space, a deep talent pool and an extremely high quality of life. Financial services moving to Frankfurt will find a competent, helpful and welcoming regulator in BaFin, who will accept large portions of applications in English. The Financial Centre is already home to more than 150 foreign banks and 75,000 people employed in financial services.

Euro Clearing

Joint Declaration of Frankfurt Main Finance and Paris EUROPLACE on Euro Clearing

The United Kingdom is leaving the European Union and will in all likelihood lose access to the common market. In light of this, Frankfurt Main Finance and Paris EUROPLACE jointly request the concerned European authorities to consider some fundamental principles regarding future oversight of Euro Clearing:

  1. Central counterparties are key to managing risk for investors. These robust structures are essential drivers of trust in the financial ecosystem.
  2. As a concentrator of risk, CCPs are systemic. In times of crisis, a diverse ecosystem of CCPs plus a clear, manageable resolution process are key prerequisites to preserving stability.
  3. In the case of resolution, the EU Supervisors and the resolution authority must be able to expeditiously reach the appropriate decisions necessary to fully protect European financial security, including its monetary policy constraints in a way that shields European tax payers from potential losses.
  4. In that context, day to day risk monitoring is crucial. It necessitates easy access to information by European supervisors, as well as efficient conditions for access to central bank liquidity based on a one-step decision making process.
  5. The legal framework in which the CCP operates must be EMIR equivalent and the CCP should fall under the jurisdiction of the European Court of Justice.

Frankfurt Main Finance and Paris EUROPLACE urge the responsible European authorities to clarify their position without delay and by doing so, bolster certainty in this systemically relevant pillar of the European financial system.

Download the Press Release

Financial Centre Frankfurt

Japanese Sumitomo Mitsui Financial Group to open two subsidiaries in the Financial Centre Frankfurt

Sumitomo Mitsui Financial Group, Inc. (SFMG), Japan’s third largest bank, will establish two new subsidiaries in the Financial Centre Frankfurt. The decision was announced Monday, July 03, 2017, by SMFG President and CEO, Takeshi Kunibe. According to the group’s press release, the move will allow them to continue to service EU clients after the United Kingdom’s withdrawal from the EU.

Pending regulatory approval, the Japanese financial group intends to establish a new banking subsidiary as well as a securities subsidiary in Frankfurt. The new subsidiaries should allow SMFG to avoid disruption of services to their European clients and provide flexibility given the current political and economic uncertainty.

Frankfurt Main Finance (FMF) welcomes SMFG’s decision and looks forward to welcoming them to the Financial Centre Frankfurt. “Yoku irasshaimashita, Welcome Sumitomo! Brexit starts to bite,” says Hubertus Väth, Managing Director of FMF. “Japanese banks warned early on about the consequences of Brexit and accordingly have taken the lead. With Sumitomo Mitsui, the third Japanese banking group has chosen the Financial Centre Frankfurt. Frankfurt Main Finance expects a total of at least twelve banks to announce their decision for Frankfurt this year.”

In the last two weeks, Japanese banks Daiwa and Nomura also publicly announced their decisions to establish or expand operations in the Financial Centre Frankfurt. Since the results of the UK referendum, FMF has worked to assist financial services to find a new home in the Eurozone. The Financial Centre Frankfurt has emerged as an early front runner amongst European financial centres, noted for its political and economic stability, highly available and competitively priced real estate, deep talent pool, outstanding infrastructure, and high quality of life.

Link to the press release from Sumitomo Mitsui Financial Group, Inc.: http://www.smbc.co.jp/news_e/e600418_01.html

Japanese investment bank Nomura opts for new location in Financial Centre Frankfurt

Another Japanese bank has applied for a banking license in Germany and chosen to base the new business unit in the Financial Centre Frankfurt. Frankfurt Main Finance (FMF) is delighted that with Nomura another Japanese bank has officially decided to come to Frankfurt. “The Japanese banks were precisely the ones, who warned early on about the consequences of Brexit, and now are among the first to decide,” says Hubertus Väth, Managing Director of the Financial Centre initiative Frankfurt Main Finance.

“We would like to thank Nomura for their trust in the Financial Centre Frankfurt and look forward to welcoming our new colleagues. Nomura is already a member of Frankfurt Main Finance. We expect their announcement to act as a signal, and that further decisions by other prominent institutes will follow in the coming weeks.”

Just a few days ago, the Japanese Daiwa Securities Group announced their decision for the Financial Centre Frankfurt.

Press Release from Nomura Bank.

Frankfurt Main Finance Celebrates New Membership of Oliver Wyman

Strategy consultancy Oliver Wyman has become a new member of Frankfurt Main Finance. Now, almost 50 members are hard at work in support if the Financial Centre Frankfurt. Through their membership, all representatives underscore their commitment to Frankfurt and commitment to its national and international importance.

“We are delighted to welcome Oliver Wyman GmbH as a sustaining member. For a long time now, Oliver Wyman has proved its commitment to the Financial Centre Frankfurt through its engagement,” explains Dr. Lutz Raettig, President of Frankfurt Main Finance. For example, the strategy consultants supported the FinTechGermany Awards 2017 as a sponsor. In addition, Matthias Hübner, Partner at Oliver Wyman in Frankfurt, was a juror for the award ceremony.

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across nearly 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 4,500 professionals around the world who help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. In addition, Oliver Wyman regularly publishes studies, white papers, etc., and collaborates with leading academics to carry out research projects on future topics.

“In these uncertain times, the preservation and development of a strong financial centre continues to gain in importance for Germany. As one of the leading strategy consultancies in the German market, it is a great honour and important for Oliver Wyman to support Frankfurt Main Finance with our experience and expertise in the financial sector. We are looking forward to a successful cooperation,” says Matthias Hübner, Partner and FinTech expert at Oliver Wyman.

Brexit Negotiations

Frankfurt Main Finance hopeful for constructive Brexit negotiations

With the formal declaration by the United Kingdom’s government to withdraw from the European Union, Brexit has now entered a new and decisive phase. Hubertus Väth, Managing Director of Frankfurt Main Finance e.V. states, “The beginning of the exit negotiations between the United Kingdom and the European Union are imminent. The negotiating parties are entering uncharted territory. Of the utmost importance, will be standing fast to the maxim that maintaining stability in the financial system must take precedence over individual interests. Both parties must strike the delicate balance between averting a cliff-edge scenario while still maintaining the recognizable appeal of membership in the EU.”

Frankfurt Main Finance continues to regret the United Kingdom’s withdraw from the EU and anticipates the loss of rights, including passporting. Managing Director Väth further explains, “The Financial Centre Frankfurt is exceptionally situated to assume a position functioning as a bridge for London into the EU. As the home of the European Central Bank, the Europe’s insurance supervisory mechanism, Europe’s largest stock exchange and the largest internet hub for data traffic, Frankfurt offers best infrastructure for credit institutions and financial services providers active across Europe. Frankfurt’s TechQuartier and dynamic, growing FinTech ecosystem have been distinguished by the Federal Government with the Financial Centre Frankfurt’s appointment as Germany’s Digital Hub for the finance industry. Therefore, we still estimate that around 10,000 jobs will be relocated to Frankfurt in the coming years.”

Contact Person for Media Inquiries:
Dr. Ralf Witzler
Frankfurt Main Finance e.V.
Telephone 069 94 41 80 – 50
ralf.witzler[at]fmfinance.de