Initiative Gives a Face to the Financial Centre

A reliable partner for 10 years with a strong and weighty voice – ideally geared to meet future challenges

Volker Bouffier. © Staatskanzlei

By Volker Bouffier, Prime Minister of the State of Hesse

The initiative Frankfurt Main Finance celebrates its ten-year anniversary, and it is an immense pleasure for me to express my cordial congratulations in this regard! It means a great deal as far as the status and reputation of the initiative is concerned that Börsen-Zeitung publishes special pages on this occasion. I also explicitly wish to express my appreciation and am pleased to take this opportunity to thank those responsible for their long-standing commitment.

The Financial Centre Frankfurt is a great deal more for the state of Hesse than just a significant economic factor. It enriches our federal state as an additional facet of which we are proud. For decades now, the bank towers have been a hallmark of Frankfurt’s city silhouette. You can admire them from an aircraft when taking off or landing at Frankfurt International Airport, when driving across a number of motorways in Hesse or from the elevation of the Große Feldberg.

Over 62,000 people currently work in these impressive bank towers in Frankfurt’s city centre. They are employed by 199 banks – including some 160 international institutions. The unique network of these enterprises is augmented by first-class research facilities. Moreover, the key authorities of the European Financial Markets Supervisory Authority, the European Central Bank (ECB) and our national watchdogs, namely the Federal Financial Supervisory Authority (BaFin) and Deutsche Bundesbank are assembled here at Frankfurt. A brisk start-up scene and numerous fintechs round off the ecosystem of the financial sector that has grown in the course of many years.

Identifying and exploiting opportunities

The government of the state of Hesse intensively follows the development of this financial centre and has a reliable partner in Frankfurt Main Finance. Only in constant exchange between policymakers and industry are we able to respond to current developments of the globally networked financial industry. Policymakers are responsible for creating the necessary fundamental conditions. The shared objective of Frankfurt Main Finance and the government of Hesse is to identify and exploit opportunities in tandem with early detection of risks and taking appropriate precautions. The fact that today in Frankfurt we are talking about the most important financial centre in continental Europe shows that our cooperation is successful and that we have already achieved a great deal together. This constitutes motivation to continue our work with an ambitious and confident mindset.

 “Frankfurt Main Finance has always been the central platform for information and exchange of views. By today, 50 noteworthy members have joined the initiative, representing banks and fintechs as well as universities and consultancy firms.”

A stable and prospering economy has its foundations on a healthy financial and capital market. Just how powerful this relationship is was demonstrated during the Financial Crisis in 2008. The tremors of a stumbling financial sector were felt across the globe and in almost all economic areas and walks of life. Many of the errors previously committed suddenly raised their ugly heads in cumulative form, and today it is in the common interests of policymakers, the financial sector and the real economy that this crisis will not be repeated.

The fact that the initiative Frankfurt Main Finance was founded at this precise moment in time was an important signal and of outstanding importance for Frankfurt as a financial centre. This is particularly so because here in Frankfurt lies the monetary heart of Europe’s most important economy.

Since then, Frankfurt Main Finance has been the central platform for information and exchange. By today, 50 noteworthy members have joined the initiative, representing banks and fintechs as well as universities and consultancy firms. Understanding their needs, pooling resources and formulating positions is the collective mandate of Frankfurt Main Finance. Those responsible – led by President Dr Lutz Raettig – meet this requirement in an outstanding manner and, not least, due to their many years’ experience and remarkable international network.

 “The Financial Centre Frankfurt is a great deal more for the state of Hesse than just a significant economic factor. It enriches our federal state as an additional facet of which we are proud.”

However, the task at hand also includes creating a bridge to companies operating in the real economy and to consumers. Understanding the mechanisms of the banking and capital market – particularly in times of rapid digital change and global networking – is not easy and at the same time represents the basis for trust and confidence. Over many years, a vacuum had originated here that could only be resolved through personal commitment, information, and the breaking down of complex facts. Frankfurt Main Finance has given a face to the financial centre of Frankfurt and the institutions to which it serves as a home. This creates credibility, reputation and reliability.

No easy tightrope act

In the past ten years, the general framework conditions for the financial industry have undergone significant change. Today, the regulation standards are much higher, and supervisory structures have been adjusted in relation to 2008. In Europe, at present we clearly are on the important path towards a capital market and banking union. In terms of all agreed measures, policymakers always focus on securing financial market stability while maintaining competitiveness in an international environment. This certainly is no easy tightrope act, which is becoming even more challenging due to geopolitical changes and the process of digital transformation.

The Financial Centre Frankfurt is ideally prepared to meet these challenges. I have already described the very special network comprising all relevant market participants at a single location, with short distances between them. The stability of the financial and economic environment and the reputation of local supervisors are high and important location factors. Another positive factor is a high-performance infrastructure. With Frankfurt International Airport and the central rail and tram traffic systems, the city is ideally connected to European and international capitals, and the world’s biggest Intranet hub in terms of sheer data throughput is “Deutsche Commercial Internet Exchange (DE-CIX)” in Frankfurt. At our local universities and specialised research facilities, we train budding junior talents of which we are proud and for which we are envied at other financial locations across the globe.

We therefore have every reason to look to the future with optimism and self-confidence. Following Great Britain’s decision to leave the EU, which we greatly regret, there is nothing to stop us from moving up into leading position within the overall European structure. At present, we are experiencing intensive location-based competition between financial centres in continental Europe. The question here is who stands to benefit most from the necessary relocation in the wake of Brexit of international banks and service providers from London to the EU 27. The fact that meanwhile many experts – not only in Germany – express their assumption that Frankfurt could become the big winner amongst all continental financial centres is a partial success story of which we are proud.

Time to abandon a stand-alone attitude

At the same time, however, I am convinced that we need to abandon this insular mindset. Europe will only be competitive on an international scale if we cooperate and can truly speak of a European financial centre. Previously, around the world London was widely accepted in this position, and I can say with all due confidence that we plan to take over this role in Frankfurt in the not too distant future. The main prerequisite for this is that we remain attractive in the long run and build bridges to Paris, Dublin, Luxembourg and other financial centres. However, our link to the City of London also remains important. And in London ambassadors like Frankfurt Main Finance certainly are in demand.

Brexit offers us a momentum that we should not leave unused. For this reason, in exchanging views with other market participants, we are taking a very close look at the local framework conditions and discussing where we can lay the foundations to remain attractive in the long term. In the process, we also take into account our high standards as well as the activities of our competitors and changes unfolding in a worldwide structure. Here are two examples to show what I am talking about: For one thing, the future positioning of the clearing business of derivatives denominated in euros; for another, ideas concerning future financial supervisory structures in Europe. This is where the guidelines are being defined for the coming years and where we adopt a clear and unambiguous stance.

We perceive the current challenges as a major opportunity. It is particularly in this process that we need the strong and weighty voice of Frankfurt Main Finance. Accordingly, I look forward to the continuation of our mutual collaboration!

Financial Centre Frankfurt

A Network for the Future of the Financial Centre

Frankfurt is well equiped for this  – forum creates platform for discourse on wide array of topics

Peter Feldmann. © Stadt Frankfurt am Main

by Peter Feldmann, Lord Mayor of the City of Frankfurt am Main

Frankfurt Main Finance combines two traditions of particular significance to Frankfurt. One is the history of the city as a trade and financial location going back to the 13th century; another is its almost just as long history of civic dedication and commitment. It is part of our tradition of merchants and guilds to support our common interests through our own initiative.  Frankfurt Main Finance continues this principle in modern form, which is why, as Lord Mayor of the city, I would like to express my warm congratulations on the initiative’s ten-year anniversary.

On the city’s pulse

Frankfurt’s prosperity is inseparable from its role as an international financial capital. With its clear commitment to the region as the second-largest economic area of the Federal Republic of Germany, Frankfurt Main Finance has become an irreplaceable partner for us in the field of location-based marketing.

Not only does the initiative emphasise Frankfurt’s hard location factors such as its favourable traffic hub, its location for companies of international renown as well as its role as the European centre for monetary policy and regulation. It advertises the region’s quality of life just as vigorously. FMF keeps its finger on the city’s pulse. Whoever is on the lookout for news on the city’s football team’s victory in the DFB Cup Final or about the refurbished old city district will soon discover everything they need to know on the pages of Frankfurt Main Finance. And whoever is a newcomer and needs leisure time tips will also find them here. “Financial Centre Initiative” may sound brittle, but it is not.

In its role as a forum, Frankfurt Main Finance creates a platform for discourse on numerous topics to do with the city as a financial centre. In doing so, the association involves players from business, politics, media, academia, administration and associations alike. It unites and combines many different perspectives, overcoming the boundaries of the relevant disciplines in the process. Impetus of the kind delivered in the direction of Sustainable Finance, combining economic and ecological components, is exemplary in this regard.

Both the financial centre and the city benefit from this interdisciplinary approach. Frankfurt Main Finance’s approach is just as diverse: meetings, get-togethers, trips to international locations, specialist publications available for download, social media offerings – a communication mix with an impressive, multi-faceted nature. This is where the city of Frankfurt likes to be a partner, as was the case most recently on a shared tour for business journalists on the subject of euro clearing.

FinTechs take up a broad realm in the offering presented by the initiative. These innovative businesses are particularly within the City’s focus – just as Frankfurt is becoming increasingly important as an alternative to other locations like Berlin, for instance: in 2017, the consultancy PricewaterhouseCoopers (PwC) canvassed 450 businesses throughout Germany that were established no longer than 10 years ago including 50 start-ups in metropolitan Frankfurt, also from the eCommerce and financial services sector. 90% of these anticipated a rising importance of Frankfurt as a start-up hub. Almost all respondents assessed the founder climate as “good” to “very good”.

“It is part of our tradition of merchants and guilds to support our common interests through our own initiative. Frankfurt Main Finance continues this principle in a modern form.”

The statistics certainly confirm this assessment. Berlin has 3.7 million inhabitants; Hamburg has 1.86 million. Frankfurt, Germany’s fifth-biggest city with a population of 730,000 ranks in 3rd position for business start-ups. In order to boost this development, I took the initiative to establish a large institute for artificial intelligence, which is intended to build bridges between science and theory as well as business and practice. In doing so, we will make the opportunities derived from the technological future accessible to a broad public comprising the business community and society at large.

Promising ecosystem

The positive development under way in our city has also been confirmed by others. The conclusion reached in a study commissioned by the Goethe University and other partners, reads as follows: “The message is clear: Frankfurt is a highly promising ecosystem, but there are still key areas in which collaboration is urgently needed.” And here is another invaluable function of the initiative: the City has a partner at its side with a critical viewpoint when it comes to potential of improvement. After all, we cannot afford to rest on our laurels. However, this will only work in collaboration and interaction with many others. Not only do these include over 200 credit institutions – along with some 160 foreign banks – but also regulators such as the European Central Bank (ECB), Deutsche Bundesbank and the Federal Financial Supervisory Authority (BaFin).

Looking beyond our borders

The highly dense financial academic research network in the region ensures an analytical viewpoint. However, it is just as necessary to take a view beyond one’s own perimeters, such as into the insurance sector, the real economy or other financial centres. To this end, the Frankfurt Main Finance offers the suitable framework, which is why the City is one of its members. After all, we can only think of the future of the financial centre in networking mode. And the City is well prepared for this!

Frankfurt Main Finance – ten years of service to the financial centre

Frankfurt Main Finance (FMF) has reason to celebrate. The financial centre initiative was founded ten years ago and is continuously growing in importance. FMF has also grown in size since the Brexit referendum and its impacts on the financial sector; today it has more than 50 highly reputed members. Founded in 2008 as a reaction to the financial crisis and at the instigation of Roland Koch, then Prime Minister of Hesse, together with Petra Roth, the former Lord Mayor of Frankfurt, FMF lends the financial sector in Frankfurt and the region a voice that resonates across the world.

“The Financial Centre Frankfurt plays an important role in addressing the major challenges posed to the financial sector by the UK’s exit from the European Union,” says Hessian Prime Minister Volker Bouffier. “In these times, it is important for Frankfurt Main Finance to pool the interests of the financial sector in Hesse and in the federal republic and makes them heard. This also benefits trade and industry and, consequently, the state of Hesse as a whole.”

“Frankfurt is a cosmopolitan, liveable and international city. The finance metropolis is an outstanding and attractive business location. Its central location in Europe along with the requisite infrastructure and proximity to the Central Bank are additional assets that speak in its favour,” says Frankfurt’s mayor, Peter Feldmann. “Frankfurt can contribute substantially to financial stability in Europe, and Frankfurt Main Finance has communicated the city’s capabilities all around the world for years with obvious success.”

Dr. Lutz Raettig, president of Frankfurt Main Finance, says: “We are proud that our consistently growing membership has placed their trust in us throughout the years. For us, this is an incentive to tackle the tasks ahead with great enthusiasm and continue to take responsibility for the financial centre. To do this we rely on our excellent and lasting partnerships with the state of Hesse, Hessen Trade & Invest, the cities of Frankfurt and Eschborn, and their economic development agencies.”
Currently, one of the top priorities of Frankfurt Main Finance is to position the Financial Centre Frankfurt and its greater region in the competition for jobs being relocated from London to the European Union. The Financial Centre on the River Main has been the focus of worldwide attention since the early hours of the day after the UK’s Brexit referendum. Being prepared and able to speak up from the very first moment brought Frankfurt a decisive media advantage, which FMF has consequently used to showcase the city’s strengths where scepticism or ignorance towards the Main Metropolis prevail.

Since March 2016, when the topic of Brexit first began to emerge on the media landscape, Frankfurt Main Finance has been mentioned in more than 2,000 different media and 96 countries in connection with this topic alone, approximately 850 interviews have been conducted, adding up to a total of some ten billion potential readers reached. FMF representatives attended relevant events in the US, Japan, Korea, China, the Middle East and, of course, many times over in London, Paris and Brussels, to represent the position of the Financial Centre Frankfurt.

Brexit

The risk of a hard Brexit puts businesses in a tight spot – stormy autumn is approaching

Companies on both sides of the channel are hoping for clarity on the impact of Brexit on their businesses by the EU summit in October, and no later than the possible EU special summit in November. To what extent the autumn will bring a transition agreement setting the status quo until the end of December 2020, remains unclear. Although this transitional period is foreseen in principle, it is highly dependent on conditions that remain unfulfilled which pose considerable obstacles. This is especially true for the Irish border issue.

Whether there will soon be clarity is still uncertain. From September onwards, the management of Frankfurt Main Finance expects a stormy autumn. Banks will have to make important decisions about their set-up over the next few weeks, as the time to prepare for Brexit at the end of March 2019 will otherwise be too tight. Just a few months before the UK’s exit from the European Union, the risk of a relatively hard Brexit has not been averted. This brings trade, industry and financial services alike under time pressure and pressure to move.

In the coming weeks, financial institutions expect not only increased inquiries from their customers, but also to decide for themselves which of the scenarios they are preparing for. “Time is running out,” says Hubertus Väth, Managing Director of Frankfurt Main Finance. “We’re expecting a stormy autumn: industrial and trade companies, as well as the asset management industry, must now seek to make the necessary arrangements with their financial services providers. It is important to Brexit-proof their financing and investments. That does not work at the touch of a button. We’re heading for a mass start which will lead to a bottleneck for those late to the line.”

Therefore, Frankfurt Main Finance advises companies from trade and industry as well as asset managers to actively pursue dialogue with their financial services providers to Brexit-proof their financing. This applies in particular to the clearing for euro-denominated interest rate derivatives. “Companies must take initiative themselves and approach the banks,” says Väth. “It is in their own interest, for example, to hedge their financing and hedge their interest rate risks even for a hard Brexit. Unfortunately, this case can still not be ruled out. The sooner they talk to their banks, the better the preparation will be, because companies will be the main victims in any case of doubt.”

Frankfurt Main Finance sees the Financial Centre Frankfurt as the logical first choice in the reorganization and orientation of the financial sector after Brexit. However, to make use of these opportunities under increasingly intense international competition requires further substantial effort.

No signs of slowing – strong first half year for Frankfurt Office Market

Following 2017’s record results, the office market in the Financial Centre Frankfurt continues to boom with take-up in the first half of 2018 reaching third highest level of the past ten years and the best first quarter since 2000. According to experts at BNP Paribas Real Estate, CBRE, Savills Investment Management and Jones Lang LaSalle, the high level of activity in Frankfurt is leading towards the lowest vacancy rate in 15 years which will continue to fall in the latter half of 2018.

As a result of Brexit, 25 financial services firms have declared intentions to expand or move operations to the Financial Centre Frankfurt. Frankfurt Main Finance expects about 2,000 Brexit related positions will be relocated to Frankfurt by the end of 2018 and still holds its estimate of up to 10,000 potential positions in the medium-term, which have yet to impact demand on the real estate market to their full-extent.

Financial services firms affected by Brexit can still expect to find ample, modern office space in the city centre. Frankfurt remains affordable in international comparison, despite the waning vacancy rate now at 8.3% and Prime Rents increasing to 43 EUR/m2/month, according to data published by BNP Paribas Real Estate. In fact, the Financial Centre Frankfurt is just a fraction of the price of London or Paris. In the second quarter, prime rents in London and Paris topped 118 and 71 EUR/m2/month, respectively. Both cities have a vacancy rate below 6%.

These developments are discussed in detail by the Managing Director and branch head of BNP Paribas Real Estate, José Martínez, and Carsten Ape, Managing Director of CBRE, Andreas Trumpp of Savills Investment Management and Markus Kullmann of Jones Lang LaSalle (JLL), as well as Managing Director of Frankfurt Main Finance, Hubertus Väth.

The deviations in the data concerning vacancy rate, take-up or prime rents between the participating real estate firms result from the varying collection methodoligies or populations. Frankfurt Main Finance does not weight or value the individual methods, but instead presents them transparently.

José Martínez, Managing Director of BNP Paribas Real Estate GmbH and Frankfurt Branch Manager

“The upward trend in the Frankfurt office market continues. With a take-up of 273,000 m2 in the first half of 2018, the result is just under 14% above the ten-year average. Compared nationwide, take-up was higher only in Munich and Berlin.

In no other city are the results distributed so evenly across the various industry groups as in Frankfurt. First place is taken by banks/financial services with a share of 14.5%. Second place is taken by co-working providers, which contribute just over 12 % and are gaining increasingly in importance as a demand group in Frankfurt as well. The top three is completed by the group media and advertising, which is responsible for 12%. Places four to six are filled by three industry groups, which each have a share in take-up of just under 11%. These are public administration, ICT firms and consultancies. This even distribution of the result underlines impressively the very broad demand base and lively market activity. Among the most important deals were the leases of 24,000 m² by the FAZ newspaper in Europaviertel, 8,300 m² by the German Finance Agency in Heddernheim/Mertonviertel and 8,000 m² by the Bethmann Bank in the Banking District.

The reduction in the amount of vacant space has continued and currently stands at 1.28 million m². This is the lowest volume in the last 15 years. Of the total vacancy, however, just under 48% (611,000 m²) has the modern quality preferred by occupiers. The vacancy rate in the overall market has fallen to 8.3%. The biggest problem remains the shortage of space in the central, highly-sought-after locations. Due to the strong demand and inadequate supply of high-quality space, construction activity has increased. A total of 592,000 m² is under construction, but only about half of it is available to the market; the rest is already pre-let. It also needs to be taken into account that most of the supply is only concentrated on a few projects, which in some cases will not be available until 2023. As a result of the relationship between supply and demand outlined above, the top rent has increased compared to the previous year by 12% to 43 €/m². A similar dynamic upward trend has also been recorded for average rents, which have risen by just over 8% to currently 18.30 €/m².

The strong demand situation and the supportive economic environment for the occupier markets will stimulate take-up in the second half-year. This will be even more the case, because the share of major deals should increase. Against this background, an above-average take-up is again expected for the year as a whole, which should exceed the 600,000-m² mark. As the reduction in the amount of vacant space will continue, albeit at a slower rate, a further increase in rents is expected.”

Carsten Ape, Managing Director, CBRE

“Thanks to the strong economy, Frankfurt is in a dynamic state. We are observing an unwaveringly high demand in the office market. With an office space take-up of 253,700 m2 the first half of the year was 13 % above the strong previous years. That strong momentum at the beginning of the year persists throughout the first half of the year.

While the first quarter of the year was dominated by single large-scale projects such as the Frankfurter Allgemeine Zeitung leasing around 24,000 m², the current growth in Frankfurt can mainly be attributed to the traditionally strong financial sector: in addition to banks, consulting firms and law firms, companies from the real estate industry are looking for space.

Moreover, the focus increasingly lies on small-scale objects of up to 1,500 m² – a segment which made up 53% of the 106,800 m2 take-up of the second quarters. Co-working is contributing to that upsurge: within just a few years take-up increased from 1,100 m² in 2015 to 24,800 m² in the first half of this year. Especially start-ups are causing a demand in shared offices – an innovative segment giving the Frankfurt office market an opportunity to grow and ensuring its flexibility.

The high demand, the repurposing and demolition of existing office space as well as a rather modest number of completed real estate projects, caused the vacancy rate to drop to 8.5%. However, construction activity remains to be high. The pipeline is well filled. By the end of 2018, 114,000 m² of office space is to be completed in Frankfurt, of which only about 16% is still available. While the number of available office space is becoming increasingly limited, there is still room on the market.

It is likely that Brexit will have an impact in the medium term. Currently, the political developments in Great Britain are unpredictable and thus, many market participants are awaiting the outcome of the negotiations. However, it can be predicted that Frankfurt will be one of the Brexit winners.

The strong momentum of the Frankfurt office market is likely to continue throughout the second half of the year. The persistently high demand and shortage in office space located at the city centre could lead to an increase in prime rents. Nonetheless, national and international investors are interested in attractive investment opportunities in the Rhine-Main area. Frankfurt continues to be a focal point.”

Andreas Trumpp MRICS, Head of Research Deutschland, Savills Investment Management

“The outcome of the negotiation process for Great Britain’s departure from the European Union will determine the future of other Financial Centres such as Frankfurt. In 2017, the Frankfurt Office Market was marked by record results, even without Brexit-related relocations. An upward trend that persists in the first half of this year. The dynamic of Frankfurt and the Rhein-Main-Region is beneficial to real estate investors, which is amongst the reasons of why Frankfurt moved up 4 places to the 17th most dynamic city in Europe in the recently published Savills IM Dynamic Cities Index. The Main metropolis benefits from its excellent international train and airport infrastructure, above average public transport system and digital network on the local, national and international level. Real estate investors will find investment opportunities in every size category, real estate segment and risk profile. The Financial Centre Frankfurt offers unique investment opportunities that other German cities can hardly provide.”

Markus Kullmann, Team Leader Office Leasing Frankfurt am Main, JLL

“The Frankfurt Office Market reached a strong sales momentum midyear. With a take-up of 260,000 m² a comparison to the previous year (+ 9%), and both the 5- and 10-year average (+ 28% bzw. + 14%.) highlights the outstanding performance. Frankfurt has reached its third-best half-year take-up volume in the past ten years. While large scale rentals of over 10,000 m², such as the rental by the FAZ in the first quarter, do not occur every quarter, we are highly confident that the second half of the year will yield some top lettings – at prime rates. Companies seeking to hire or keep high-calibre personnel are willing to pay prime rents for excellent properties in top locations. Since the dynamic of demand continues to be high, I am confident that take-up will reach 575,000 m² in 2018.

An issue with which actors will be confronted on Frankfurt’s real estate market: vacancy does not necessarily mean vacancy. Available space does not meet the requirements in location, amenities, leasing period and rent. Meanwhile, the vacancy rate is at 7.3 %, with tendency to decrease to 6.8% by the end of the year. As quick reminder: The highest quote was at 17.9 % in 2006. From 2011 (15%) onwards, it gradually declined.

The urgently needed vacant office space did not become available on the market in the second quarter. This is unlikely to have changed by the end of the year. The supply in completed office space of around about 10,000 m² that will become available on the market in the next months is rather modest. I expect a notable relief to hit the market in 2020. By then, 485,000 m² could be constructed.”

Hubertus Väth, Geschäftsführer, Frankfurt Main Finance e.V.

“The high level of leasing activity in Frankfurt and the sinking vacancy rate show that the real estate market in the Financial Centre is booming. The extraordinary quality of life, excellent infrastructure, high concentration of innovative companies and the strong global commercial network make Frankfurt and the Rhein-Main Region one of the most popular destinations international firms. Frankfurt is able and ready to accommodate the numerous financial services firms relocating to Frankfurt from London due to Brexit.”

Financial Centre Frankfurt welcomes new financial institution – Chinese CICC will be based in Frankfurt

The China International Capital Corporation (CICC) has decided to establish a continental European office in the Financial Centre Frankfurt. The Beijing-based investment bank has been listed on the Hong Kong Stock Exchange since 2015. Alongside CICC, more than 24 banks have chosen to relocate their European headquarters to or expand their capacities in the Financial Centre Frankfurt since the Brexit referendum two years ago.

“We are extremely delighted by CICC’s choice in location,” says Hubertus Väth, Managing Director of the Financial Centre initiative Frankfurt Main Finance e.V. “With the opening of the CICC office in Frankfurt, the leading investment bank from the world’s second-largest economy is now represented in the Financial Centre. We see this as another glowing affirmation of the high quality of the Rhine-Main region. CICC’s decision confirms that the city’s strong appeal extends far beyond Europe and can attract financial institutions from Asia, a region whose impressive significance continues to grow,” comments Väth.

Just recently, the Chinese bank, Essence Securities, chose to establish its base in Frankfurt. The Frankfurt-based China Europe International Exchange (CEINEX) was a decisive factor for both Chinese financial institutions. A fact that is clear to CHEN Han, Co-CEO of CEINEX.

“We are convinced that the city will become the leading Financial Centre in the Eurozone, which is why we came to Frankfurt. The city is the ideal stepping stone for Chinese financial institutions, who plan on establishing a foothold in Europe or seek to expand their market presence,” says Dr. CHEN. “We are happy and proud that we could play a significant role in attracting an important institution like CICC to Frankfurt.”


About Frankfurt Main Finance

Frankfurt Main Finance is the voice of the leading financial centre in Germany and the euro zone, Frankfurt am Main. The initiative has more than 50 members including the State of Hesse, the cities of Frankfurt and Eschborn, and dozens of prominent actors in the finance sector. Through their membership and engagement, they all demonstrate their close relationship to Frankfurt and desire to position Frankfurt amongst the top national and international financial centres. Frankfurt Main Finance leverages the influence of its members to advocate for the Financial Centre Frankfurt and provide high-caliber dialogue platforms. For more about Frankfurt Main Finance and its members, please visit www.frankfurt-main-finance.com.

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About China Europe International Exchange AG (CEINEX)

Based in Frankfurt/Main, Germany, CEINEX is a joint venture established by the Shanghai Stock Exchange, the Deutsche Börse Group, and the China Financial Futures Exchange. As the first market place for RMB-related and China-related investment products in the Chinese offshore market, it acts as a unique bridge between the Chinese and international financial markets. CEINEX is dedicated to providing reliable offshore RMB- and China-related financial instruments to investors, so as to promote RMB internationalization.

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Frankfurt Finance Summit: Challenging times – who is ready to set the pace?

Themes that will be discussed at the 8th Frankfurt Finance Summit:

  • Tomorrows strategies in the financial industry in times of change and uncertainty
  • Euro clearing: an open race
  • Finance beyond digitalisation: Artificial intelligence as the new frontier

Since 2011, renowned international and national experts from the financial industry have gathered at the Frankfurt Finance Summit. Under the motto “Ready, Steady, Go! Who is ready to set the pace in challenging times?”, decision-makers from central banks, stock exchanges, supervisory authorities, banks, insurance companies, politics, business and academia are meeting on 29 May 2018 to discuss current issues faced by European Economy, regulators and financial markets.

This year’s summit evolves around the strategic responses to challenges faced by the financial industry in times of change and uncertainty. Moreover, the future location and supervision of euro-denominated clearing transactions by central counterparties after Brexit will be discussed by leading financial industry experts. Participants will also debate the advancement of artificial intelligence and the potential implications for banks and financial institutions. The event can be watched live via the following link: www.frankfurt-main-finance.com/livestream

„We are pleased that the summit allows us to discuss a wide range of topics with leading experts. The questions to be debated are of utmost importance to the future of the Financial Centre Frankfurt as well as to the entire financial industry,” says Dr. Lutz Raettig, President of Frankfurt Main Finance.

The Frankfurt Finance Summit is a well-established forum that is characterized by the exclusivity and expertise of its attending experts. Amongst the participants are Katharine Braddick, Director General of Financial Services at HM Treasury, Jeremy Browne, Special Representative of the City of London Corporation to the EU, Charles Delingpole, CEO and Founder of ComplyAdvantage, Jeroen Dijsselbloem, Former President of the Eurogroup, former Minister of Finance of The Netherlands, Karin Dohm, Managing Director and Global Head of Government and Regulatory Affairs and Group Structuring at Deutsche Bank, Markus Frank, City Council and Head of the Department of Economy, Sports, Public Safety and Fire Prevention of the City of Frankfurt, Bernd Geilen, Vice-Chairman and Chief Risk Officer at ING-DiBa, Thomas Grosse, Industry Leader Banking and FinTech at Google Germany, Christoph Hock, Head of Multi-Asset Trading at Union Investment Privatefonds, Felix Hufeld, President of the Federal Financial Supervisory Authority (BaFin), Kim Körber, Founder and Managing Director of BETTER ONE, Dr. Jörg Kukies, State Secretary at the Federal Ministry of Finance, Sylvie Matherat, Member of the Management Board and Chief Regulatory Officer at Deutsche Bank, Yves Mersch, Member of the Executive Board of the European Central Bank, Erik Tim Müller, Chief Executive Officer at Eurex Clearing AG, Carsten Mürl, Head of Enterprise Security Solutions Germany at Mastercard, Markus Nigg, COO at ti&m AG, Fabrizio Planta, Head of Markets Department at the European Securities and Markets Authority, JP Rangaswami, Group Chief Data Officer and Group Head of Innovation at Deutsche Bank AG, Dr. Cornelius Riese, Chief Financial Officer at DZ Bank AG, Dr. Thomas Schäfer, Member of the Hessian Parliament and Hessian Minister of Finance, Inken Schönauer, Editor-in-Chief at EURO FINANCE magazin, Professor Dr. rer. pol. Dr. h.c. Udo Steffens, Chairman of the Executive Board at the Frankfurt Institute for Risk Management and Regulation (FIRM), Prof. Dr. Uwe Stegemann, Senior Partner at McKinsey & Company, Francisco Webber, CEO and Co-founder of Cortical.io, Annette Weisbach, ECB Correspondent Germany at CNBC International, and Peter J. Wirnsperger, Partner Cyber Risk Services at Deloitte.

As part of this year’s summit a Frankfurt Finance Market Place will take place at which leading companies of the Rhine-Main region are presenting themselves and which offers networking opportunities.

The next and 8th Frankfurt Finance Summit will take place at Kap Europa located at Frankfurt’s central Europaviertel. The conference will be held in English. Find more information here.

Frankfurt Main Finance

Frankfurt Main Finance e.V. continues to grow and extends its executive board

The Financial Centre initiative Frankfurt Main Finance e.V. continues to grow in 2018. With Reinvent Law GmbH, Fincite GmbH and Accelerator Frankfurt GmbH joining, the initiative gained three new members – raising the number of members to 54. Through their membership the representatives of public administration, science, the financial market and financial technology demonstrate their commitment to the Financial Centre Frankfurt, advocate for its national and international importance and actively take up current finance topics.

The executive committee appointed Andreas Glänzel as managing director with immediate effect to strengthen the executive board. Frankfurt Main Finance is thus reacting to the growing demand for information on the Financial Centre. The 53-year-old banker Glänzel has long-standing experience in the field of financial communication and previously held the position of marketing director at the Deutsche Bank corporation. As managing partner of NewMark Finanzkommunikation he currently supports companies in the field of digital communication. Moreover, he lectures students at the International School of Management on marketing and communication.

“The Financial Centre Frankfurt is on the rise. This is shown by the global demand for information on the Financial Centre Frankfurt and the growing number of our members.”, says Dr. Lutz Raettig, President of Frankfurt Main Finance. “We are proudly welcoming Reinvent Law, Fincite and the Accelerator Frankfurt, who are each seizing the opportunity that digitalisation brings and are thus shaping the future. Andreas Glänzels appointment as managing director is a great addition that allows us to react to new challenges in several ways.”

The new member Reinvent Law GmbH was founded in December 2017 and offers its services as Legal Innovation Hub to law firms, corporate legal departments, legal tech companies and universities. They focus on testing new legal tech solutions live, using the knowledge of experienced entrepreneurs and developing new products in close collaboration with Reinvent employees.

The in April 2015 founded software company Fincite GmbH offers software solutions for digital asset & wealth management. Their platform Fincite.Core is the basis for robo advisory and other asset management products, which enable financial service providers to analyse, monitor and optimise existing portfolios as well as to implement dynamic saving plans – across multiple accounts and deposits. Fincite stands for a new, interconnected finance approach, which prioritises the end customers portfolio performance.

Founded in 2015, Accelerator Frankfurt is an independent accelerator that supports startups becoming ready to enter the German market by connecting them with partners, clients and investors. The startups complete a four-month go-to-market program during which they have access to a shared workspace, conference rooms and other services that are offered by partners. The program focuses on Fintech, RegTech, Cybersecurity, InsureTech, PropTech und Blockchain startups.

Frankfurt Main Finance grows: three new members pledge their support for Financial Centre

The Financial Centre initiative Frankfurt Main Finance is proud to welcome three new members. With the addition of SDG Investments GmbH, niiio finance group AG and Vendôme Associés, the initiative now has more than 50 members. The young companies niiio finance group and SDG Investments join as FinTech members, and Vendôme Associés as a sustaining member.

The association’s members are representatives from research institutes, the financial sector, public administration and the emerging FinTech sector. Through their membership and engagement, they all demonstrate their close relationship to Frankfurt and desire to position Frankfurt amongst the top national and international financial centres. Frankfurt Main Finance leverages the influence of its members to advocate for the Financial Centre Frankfurt and provide high-calibre dialogue platforms.

“We are delighted about the new members and their commitment to the Financial Centre Frankfurt,” say Dr. Lutz Raettig, President of Frankfurt Main Finance. “The growth strengthens the association and lends more power to our voice – a benefit for all members. In turn, we also provide fast, direct access to a prominent industry network.”

Since Brexit discussions began in 2016, Frankfurt Main Finance has been an in-demand conversation partner for the media, reaching more than eight billion potential contacts with its messages. Publications in 93 countries have either conducted interviews with representatives of the initiative or published statements and comments released by Frankfurt Main Finance. In addition to promoting the Financial Centre Frankfurt as a home for financial services affected by Brexit, Frankfurt Main Finance is also an outspoken advocate for the Frankfurt Rhine-Main Region’s emerging FinTech-ecosystem.

Founded in 1987, the new sustaining member Vendôme Associés specialises in the direct recruiting of leaders and experts as an independent HR and Executive Search Consultancy. Headquartered in Paris, they continue to strengthen their presence in Germany, opening a Frankfurt office in 2014. “We are thrilled to join Frankfurt Main Finance and to actively support the promotion of this future-oriented and promising city,” says Anne von Bredow, partner at Vendôme Associés. “We believe Frankfurt can attract even more talents from other European countries once people realize how much the city has to offer in terms of career possibilities, infrastructure and cultural life.”

Digital services for the digital future of banking – that is niiio finance group’s speciality. “Our goal is to position niiio finance group as a strong member of the FinTech Ecosystem in Germany’s leading financial centre and thanks to our membership in Frankfurt Main Finance, hopefully develop valuable synergies with cooperation partners,” says Johann Horch, CEO of the Niiio Finance Group. In addition to the robo-advisor, the young FinTech offers a community platform, API banking tools, tailored consulting and development services, and operating models.

SDG Investments operates a matching platform for financing and investment products based on the United Nations Sustainable Development Goals (SDGs). “We became aware of Frankfurt Main Finance through the SDG Fintech Initiative,” explains Frank Ackermann, director and managing partner at SDG Investments. “From our point of view, Frankfurt, as the most important financial centre in continental Europe, is the right location for our activities. Since we are aimed at institutional investors, we achieve the highest degree of efficiency here. We hope that we will find many supporters among the members of Frankfurt Main Finance.” Through the platform, registered professional and institutional investors will find sustainable investments that meet their individual investment criteria.

Costs of relocating Euro Clearing significantly lower than expected

  • Up to thirty-percent savings for asset managers if Euro Clearing moves to EU27
  • 100 billion USD costs estimated by London Stock Exchange found far too high
  • Maximum costs over five years to be around EUR 3.2 billion

Frankfurt am Main – The discussion on the effects of Brexit on Euro Clearing and its supervision continues to concern experts, practitioners and politicians. A working paper from Frankfurt based asset manager, Union Investment, indicates that relocating Euro Clearing to an EU27 financial centre would result in significant cost savings for asset managers. These savings should be realised in initial margin costs and clearing broker fees which currently account for approximately seventy-percent of the total clearing costs for asset managers. The paper explains that in the long term, the up to thirty-percent savings would compensate for any temporary additional costs caused by a wider bid-offer spread.

Another working paper by the Center for Financial Studies (CFS), an independent non-profit research institute at Frankfurt’s Goethe University, contests London Stock Exchange’s (LSE) estimate and other similar studies. According to the paper’s author and CFS Managing Director, Professor Dr. Volker Brühl, “Due to the fragmentation of the market there may be a temporary increase in costs. However, the costs of up to USD  100bn cited by LSE are not verifiable and are far too high. Basing an estimate on more realistic assumptions, the maximum costs over a period of five years are likely to be around EUR 3.2bn. This is before even accounting for the potential savings that asset management companies could make as a result of the relocation.”

Central counterparties (CCPs) and clearing houses are systemically relevant and critical components for maintaining global financial stability. Any crisis situation would likely require an injection of euro liquidity from the ECB and thus, these CCPs deserve to fall under ECB supervision. “The primary goal of any discussion on Euro Clearing must be protecting stability in European financial markets,” explains Hubertus Väth, Managing Director of Frankfurt Main Finance. “The exaggerated estimates stemming from London are neither constructive nor prudent. While decisions on Euro Clearing should not be made purely on a cost basis, the findings of CFS and Union Investment are reassuring. Should clearing relocate, the Financial Centre Frankfurt would be a competent alternative to London, especially with Deutsche Börse’s Eurex Clear.”

Currently, ninety-percent of euro-denominated OTC derivatives are cleared in London. Following Brexit, the calls to relocate Euro Clearing to a European financial centre under the ECB’s supervision, like Frankfurt, were reborn. In response, estimates from the London Stock Exchange pointed to a cost increase of more than 100 billion USD if clearing were to leave London.

The study from the Center for Financial Studies can be downloaded here.

The study from Union Investment can be downloaded here.