finance industry

CFS Index shows upward trend – Finance industry revenues developing positively

The CFS Index, which measures the condition of the German financial sector on a quarterly basis, rises by 1.6 points to 110.3 points in the second quarter of 2016. The increase is based on the strong development on revenues in the finance industry. Contrary to expectations, however, the earnings performance of the financial institutions remains on a downward trend, while the service providers remain on a steadily positive trend. The investment volume of the finance industry is stable and almost unchanged. The financial institutions are anticipating job cuts in the current quarter; up to now the number of employees has remained stable at a neutral level.

“The survey results prove that a number of financial service providers are in a period of reorganisation, because the pressure on earnings in the industry continues to rise,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, comments the results.

Finance industry sees the future international importance of the Financial Centre Germany at a historic high

The future international importance of the Financial Centre Germany reaches a historic high of 136.8 points. Owing to Britain’s potential exit from the EU, the corresponding value rises by 20.7 points.

Dr. Lutz Raettig, Executive Chairman of Frankfurt Main Finance e.V., emphasized, “We all deeply regret the results of the referendum, but naturally, we also respect the outcome. As a consequence, financial centres within the EU will now compete with one another to lure individual product areas and activities out of London. Frankfurt Rhine-Main will certainly be at the centre of this competition, but in a constructive and cooperative manner.

Business volume of the finance industry develops positively – contrast between earnings performance of financial institutions and service providers

The surveyed financial institutions and service providers manage to considerably increase their revenues/business volume again following the poor performance in the first quarter. The corresponding sub-index for the financial institutions rises by 2.7 points to 107.2 points in the second quarter. The service providers raise their revenues by 3.8 points to 120.3 points, which is only slightly below the prior-year level. The finance industry expects to maintain these levels in the current quarter.

In terms of earnings, the financial institutions record a further decline, contrary to their expectations. The corresponding sub-index falls to 96.9 points. However, the service providers reveal steady earnings growth, in spite of negative prior expectations. The earnings sub-index for this group rises by 0.3 points to 113.1 points. The financial institutions expect the low level to persist; the service providers are more optimistic for the current quarter.

The investment volume in product and process innovations of both groups remains at a solid level. The sub-index of the financial institutions falls by 0.2 points to 112.3 points. The service providers’ sub-index falls by 0.1 points to 112.6 points. As such, both groups are at the same level and neither is expecting changes in the current quarter.

Financial institutions anticipating job cuts in third quarter

As for employee numbers, which the financial institutions have so far kept stable at a neutral level of 99.7 points (+0.7 points), a significant decline is expected in the current quarter. The surveyed service providers are maintaining a higher level, with a value of 105.1 points, though they have hired significantly fewer new employees than in the previous quarter. The corresponding sub-index falls by 5.9 points. The service providers are optimistic that this value will improve in the third quarter.

 

Financial Centre Frankfurt emerges as major winner of Brexit

Germany’s financial industry is in firm agreement that the Financial Centre Frankfurt will profit from a British exit from the EU, although the outcome of the British vote largely came as a surprise to the industry. The potential impacts on the German economy are also regarded as neutral to positive. These were among the results of a survey of financial institutions and service providers in the Financial Centre Germany. Securities trading and settlement in the Financial Centre Frankfurt will receive a particular boost, according to 78% of respondents. Just over half the survey participants believe the European Banking Authority (EBA) will move from London to Frankfurt. Regarding potential shortages in Frankfurt in case of an influx of business, 72% of the surveyed financial firms are concerned about adequate living space.

“The survey results confirm that many financial market participants had not expected the Brexit outcome at all. This surprise effect is reflected in the high level of stock market volatility we can expect to see in the coming months,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the results.

For almost all companies surveyed (95%), the Financial Centre Frankfurt emerges as the major winner. In addition, just over two thirds see Paris as another beneficiary of a British exit. 15% expect Amsterdam to profit. Just 6% see a positive effect for London. Hardly any respondents expect to see Milan or Madrid benefit, but one third expect positive impacts on other financial centres.

For almost all companies surveyed (95%), the Financial Centre Frankfurt emerges as the major winner. In addition, just over two thirds see Paris as another beneficiary of a British exit. 15% expect Amsterdam to profit. Just 6% see a positive effect for London. Hardly any respondents expect to see Milan or Madrid benefit, but one third expect positive impacts on other financial centres.

“Frankfurt was well prepared for a Brexit. We will make every effort to take advantage of this once in a century chance. It is clear to us that London will maintain its position as the central financial centre. We hope that the Financial Centre Frankfurt will become the bridge between London and the Eurozone,” explained Hubertus Väth, Managing Director of Frankfurt Main Finance e.V..

When asked in which business areas the Financial Centre Frankfurt could benefit in particular, 78% of respondents pointed to securities trading and settlement. Half the participants see opportunities for the areas of asset management and corporate banking, followed closely by professional services (43%). By contrast, only 7% named retail banking in this regard.

“The results reveal the market participants’ high expectations about the future role of the Financial Centre Frankfurt. Yet other financial centres are also hoping to benefit. I therefore anticipate stiff competition between various locations, so it will be crucial to highlight Frankfurt’s specific strengths to top decision-makers,” adds Professor Brühl.

It is unlikely that the European Banking Authority (EBA) will be able to keep its headquarters in a country outside of the EU. However, it remains to be seen where the EBA will choose as its next location. The majority of the German financial industry (57%) believes the EBA will move to Frankfurt. However, 33% of respondents expect the EBA to relocate to another city.

The German financial industry is also anticipating certain bottle-necks in case business activities shift from London to Frankfurt. Almost three quarters of those surveyed (72%) point to a shortage of living space; half (53%) are concerned about having enough qualified personnel; 27% believe the transport infrastructure may not be sufficient; 22% point to the availability of office space. By contrast, only 11% see Frankfurt’s IT infrastructure as a potential bottle-neck.

Majority of the financial industry in favour of limiting Britain’s access to the EU interior market and expects a Brexit to have neutral to positive impacts on the German economy

In the opinion of most financial institutions and service providers surveyed (68%), the EU should not grant Britain unrestricted access to the EU interior market after a Brexit. By contrast, 22% advocate not introducing any restrictions in spite of a Brexit. Around half the respondents (48%) regard the potential impacts of a Brexit on the German economy as neutral, while 35% see them as positive. Just 15% are anticipating negative impacts.

The results are based on a quarterly management survey of around 400 companies 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.

ARD’s Plusminus on the current Brexit Debate

Currently, one of the most discussed topics is the UK referendum regarding a possible exit from the European Union. On the most recent episode of ARD’s business programme Plusminus, the segment “Goodbye Great Britain? – Where the Germans profit from a Brexit” explored the possible effects of a Brexit for the Financial Centre Frankfurt.

“We do not wish for a Brexit to occur. It would be terrible for Germany, Europe and Great Britain. However, should it come to pass, it would be a clear opportunity for the Financial Centre Frankfurt”, explained Hubertus Väth, Managing Director of Frankfurt Main Finance during the broadcast.

The broadcast continued to illuminate certain criteria which already make the Financial Centre Frankfurt an optimal location. Taking in the imposing tower of the European Central Bank headquarters, it is clear that Frankfurt is not just Germany’s most important Financial Centre, but also one of Europe’s. Several other institutions with their headquarters in Frankfurt, like the European Insurance and Occupational Pensions Authority and the European Systemic Risk Board, also lend to the Mainmetropolis’s clout as a Financial Centre. The financial decisions made in Frankfurt resonate across the continent.

In addition to its institutional prominence, Frankfurt’s superior infrastructure offers a competitive advantage not enjoyed by all other cities. Frankfurt boasts dependable, fully integrated exchange trading systems and is the technological leader in payment transactions. Furthermore, Frankfurt is considered the world’s largest data exchange point, with peak rates of 5.1 Terabytes per second. This is essential for practitioners in the financial sector who require lightning fast and reliable connections for data transfers and transactions.

The Main Metropolis offers additional decisive advantages, like the availability of affordable office space, a deep field of service providers, top academic institutions and one of Europe’s best-connected transportation networks. Short and sweet – Frankfurt is ready to roll.

View a video of the report and read the attached article here.

 

Frankfurt Main Finance – New Website Reports on FinTech Activity in the Financial Centre

As part of an ongoing campaign to promote the Financial Centre Frankfurt as a leading FinTech hub, Frankfurt Main Finance has published their yearbook On the Move and refreshed their online presence. Both actions serve to better illustrate the FinTech activities in the Financial Centre and promote the local FinTech companies and their partners.

The new website, www.frankfurt-main-finance.com, shows which FinTech companies and institutions are already taking advantage of the enormous potential of the Frankfurt Rhine-Main region. Additionally, one can find current FinTech studies as well as a calendar featuring the numerous FinTech events in the area. Furthermore, the supporters and initiatives strengthening Frankfurt’s position as a FinTech Metropolis are listed in the new FinTech Database. Companies acting as service providers for FinTechs can also register in the database free of charge.

Another new feature on the Frankfurt Main Finance is the option to subscribe for the Financial Centre Newsletter containing news from the Financial Centre, suggested events and informative articles.

In addition to the new website, Frankfurt Main Finance is expanding their presence and efforts on Social Media. The success of this renewed effort is evident in the activities surrounding the Frankfurt Finance Summit where the designated hashtag, #FinSum16, was a top-trend in Germany on Twitter, especially within the financial sector. For continued updates on the Financial Centre, follow Frankfurt Main Finance on Twitter or LinkedIn.

Besides updates on the activities of Frankfurt Main Finance, the bilingual website also includes content regarding current topics concerning the Financial Centre, Frankfurt as an RMB Hub and the the city’s international activities.

“In addition to augmented content, Frankfurt Main Finance’s new online presence has a fresh and modern appearance. Visitors will find information more easily and quickly than before. Using the website should be enjoyable,” explained Dr. Lutz Raettig, Chairman of the Executive Committee of Frankfurt Main Finance.

 

FinTechGermany Award Honors Best FinTechs

The Financial Centre Frankfurt will soon honor outstanding FinTech companies with the FinTechGermany Award. FinTech and InsurTech companies with successful and promising business models will compete for the prize. The annual award, presented by Frankfurt Main Finance, Business Angels FrankfurtRheinMain and WM Gruppe (Börsen-Zeitung), will spotlight the German FinTech community and hopefully attract further investment. Top sponsors of the award are Deutsche Bank and Deutsche Börse. This coming September, the jury of FinTech experts and prominent representatives of the financial sector will evaluate applicants in four categories, seed/early stage, later stage, growth stage and foreign new entrant to Germany. The most important criteria considered will be financial viability, scalability and exit strategy.

Jury member and Executive Chairman of Frankfurt Main Finance, Dr. Lutz Raettig, welcomed the announcement of the award, “This award is the perfect addition to the Financial Centre Frankfurt’s FinTech landscape and the forthcoming FinTech Hub will also profit from attention from domestic and international investors. Frankfurt is an international Financial Centre that offers FinTech companies the optimal conditions for successful development and growth.”

Heading the jury is Andreas Lukic, Chairman of Business Angels FrankfurtRheinMain, who explains that the FinTechGermany Award is a positive signal in the context of the Frankfurt FinTech Center initiative. He explains, “The award creates the optimal environment for our efforts. Additionally, we have the opportunity to ease access to institutional capital and subsidies; as well as hopefully mobilizing private capital for FinTech companies.” The founder’s award will give provide FinTech and InsurTech companies access and visibility to investors at all levels as well as relevant feedback on the feasibility of their business models.

Business Angels FrankfurtRheinMain e.V. is the central forum for growing companies seeking investors and for mentoring private investors from across Germany. The organization sees itself as a patron for the youngest generation of businesses, particularly in the Rhine-Main Region and attempts to close the wide funding gap for innovators. Therefore, the network is active in politics, commerce and the community in order to strengthen Business Angels’ role as an integral supporter of entrepreneurs.

Contact Info for Business Angels FrankfurtRheinMain

Andreas Lukic, Chairman, alu@valuenet-capital.de
Frank Müller, Managing Director, info@ba-frm.de
+49 (0)69 21 97 15 91, Börsenplatz 4, 60313 Frankfurt am Main

Claudio Borio, Diana Rutzka-Hascher und Lutz Raettig

5th Financial Centre Breakfast: Challenges for the Global Economy

A decade after the financial crisis: economy is incapable of balanced growth

The long-term productivity growth in the real economy suffers a considerable degree from the effects of the financial crisis, according to recent research from the Bank for International Settlements (BIS). At yesterday’s Financial Centre Breakfast, BIS’s chief economist, Claudio Borio, revealed challenges faced by the global economy and actions that must be taken.

Frankfurt Main Finance and the Association of Foreign Banks in Germany hosted the breakfast in the Hessian branch of the Deutsche Bundesbank. The speaker for the event was Claudius Borio, who provided answers to the question why almost a decade after the financial crisis, the global economic system is incapable of returning to sustainable and balanced growth. “The analytical focus is often misaligned, and that is one reason why we are where we are now,” said Borio on situation analyses. He proposed several appropriate measures for dealing with today’s challenges.

The basic prerequisite is that financial cycles not be ignored. This is demonstrated in the results of recent research of BIS: “We have observed that financial cycles have become larger since the 80s. This is, inter alia, due to the financial liberalization and globalization of the real economy. Policymakers have done too little to limit financial upswings. And following the crises too much emphasis was placed on crisis management and too little on sustainable crisis solutions.”

As early as 2003, Borio warned of instability in the global financial system; thus, predicting the financial crisis. Since 1987, he has held various positions at BIS and is regarded as one of the most interesting and provocative economists dealing with monetary policy. In his 2014 publication “The Financial Cycle and Macroeconomics: What have we learned?” he warns of a new financial crisis and makes proposals for a new academic agenda.

The complete presentation of his speech at the Financial Centre Breakfast is available here.

Frankfurt Finance Summit 2015

Frankfurt Finance Summit Explores Paths for New Growth in Europe

Under the motto Reality Check – How to Foster Growth in the New Regulatory Environment, central bank governors, regulators, representatives of supervisory authorities, financial policy makers, academics and practitioners will meet for the fifth time in the Financial Centre Frankfurt to discuss questions of financial market regulation and their impact at the Frankfurt Finance Summit. Read more

Frankfurt Finance Summit 2014 Michel Barnier

The State of the Union: Michel Barnier and Danièle Nouy at the Frankfurt Finance Summit

At the Frankfurt Finance Summit, Michel Barnier, European Commissioner for Internal Market and Services, highlighted a fundamental benefit of the banking union in his opening address. “The banking union means that taxpayers are no longer in the front row when banks have to be rescued.” Danièle Nouy, President of the Supervisory Council at the European Central Bank, points to existing challenges on the path to greater financial stability: “the short-term challenge is to strengthen confidence in the banks’ balance sheets.” Read more

Frankfurt Finance Summit 2013 Christine Lagarde

The Future of the Euro: Christine Lagarde and Wolfgang Schäuble at the Frankfurt Finance Summit

The third annual Frankfurt Finance Summit will take place March, 2013 at the Deutsche Bundesbank (German Federal Bank). Attending will be some 170 central bank governors, banking and securities regulators, and representatives of the finance industry from 19 countries to discuss the future of the euro and how regulation and crisis management affect the world’s financial economy. The Summit is in English and will be broadcast live over the Internet at: www.frankfurt-main-finance.com/stream Read more

Anstoss am Finanzplatz

Kick-off in the Financial Centre: money doesn’t score goals, but top-level football still needs solid finances

On the first day of the football conference Kick-off in the Financial Centre, Dr. Lutz Raettig, Chairman of the Executive Committee of Frankfurt Main Finance, emphasised the close link between Eintracht Frankfurt and the financial centre. “Financial institutions dominate Frankfurt. Similarly, Eintracht, a club rich in tradition, is a giant in Frankfurt – Frankfurt is the leading financial centre in Germany, the Eintracht is the leading football club in the financial centre.” Read more