Stock market breakfast

Stock market breakfast on the trading floor with Burkhard Balz, Board Member of the Deutsche Bundesbank

The stock market breakfast on the trading floor of the Frankfurt Stock Exchange has become a unique communication platform for financial market players. The event series aims at strengthening relations between all participants by facilitating an informal exchange. Keynote speaker Burkhard Balz, Board Member of the Deutsche Bundesbank, emphasised this in his speech Economic Education – Challenge and Tasks for Everyone in the Financial Centre at the stock exchange breakfast on Thursday morning. According to Balz, Financial actors at the Financial Centre regularly exchanging ideas is necessary to ensure the success of measures taken.

While December is usually filled with end-of-year-reviews, the recent stock market breakfast focused on the future: Keynote speaker Burkhard Balz highlighted the importance of increasing economic education. The Bundesbank has already provided numerous lectures and materials online. With having organised 400 lectures, the Museum of Money is an integral part of that educational work. The Bundesbank’s position paper “Sharing central bank knowledge” – the Deutsche Bundesbank’s economic education activities“ summarises the core ideas of ​​the Bundesbank’s educational program. The desired outcome of that program are economically aware citizens: people who have the knowledge, abilities, skills and attitudes, to manage everyday situations in which economics play a role and have answers to questions concerning economic issues. This applies to personal finances as well as to economic and financial matters at the corporate, national and international level. Additionally, the media bears the responsibility to report on economic issues, said Burkhard Balz in his speech.

The discussion of the stock market breakfast goes beyond the trading floor

By commenting on a Frankfurt Main Finance Tweet concerning the stock market breakfast, Marc Richter, Senior Trader Equities Frankfurt at Baader Bank AG, highlighted another aspect of the debate on economic education: “Likewise, economic education in schools should be of further focus.” A statement Sven Schumann, Director – Head of Section Community Relations & Initiatives of the Deutsche Börse, showed agreement to with a like – the stock exchange breakfast does not only guarantee for an exchange of ideas but also facilitates an (online) discussion.

Here you will find further follow-up reports to the event series:

Apr 2018: „Economic success is a necessary stage of transition if you want to be physically successful”: Axel Hellmann at the stock exchange breakfast on the Frankfurt Stock Exchange Parquet (german article)

24. May 2017: Stock market breakfast on the floor with Hauke Stars (german article)

At home in Europe – FMF and Eintracht welcome Frankfurt’s newest banks

CFS-Index takes a clear downturn

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 4.5 points to 113.9 points in the third quarter of 2018. The significant decline is primarily due to weaker growth in earnings and employee numbers among service providers as well as slower growth in revenues and investment volume throughout the financial sector. Among the financial institutions, however, the downturn in revenue growth is offset by an increase in earnings, while sentiment regarding employee numbers is neutral.

“Given the contrary trends in the earnings of banks and service providers – rising for the former, falling for the latter – the question arises as to why their investment behaviour is so similar. It appears that macroeconomic and political uncertainties (Brexit, Italy, USA, China) are the primary cause of the slowdown in investment,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is still rated positively, albeit to a lesser degree.

Since the Brexit vote in 2016, the future international importance of the Financial Centre Germany had been rated at historically high levels. In the third quarter of 2018, the corresponding figure of 126 points remains at a good level, despite recording a significant decline of -5.3 points.

“The downward trend in the assessment of Germany’s future international significance as a financial centre is seeing the glass half empty. In recent months, other financial centres in the European Union have indeed also benefited from Brexit. In this context, the positive developments in Frankfurt could seem less significant,” comments Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., on the survey results. “But when you look at it closely, the decisions by more than 30 financial institutions to move their European headquarters to Frankfurt speak for themselves. In 2019, the Financial Centre Frankfurt will gain considerably in international importance.”

Financial industry revenue growth declines / Positive earnings growth among financial institutions, negative among service providers

As forecast by the financial institutions in the previous quarter, growth in revenues/business volume declined in the third quarter. The corresponding sub-index for the financial institutions falls by 6.1 points to 112.7 points. Service provider revenues are 5.3 points down on the previous quarter at 123.7 points. Both groups are anticipating a further slight decline in the current quarter.

There is a stark contrast between the earnings growth of the two groups. After a weak second quarter, the financial institutions have returned to a good level. The corresponding sub-index rose by 9.8 points to 111.6 points. The service providers, on the other hand, recorded a sharp decline of 11.3 points to 116.3 points. For the current quarter, both groups expect a slight decline in their earnings growth.

Investment volume down

Contrary to expectations, the growth in investment volume in product and process innovations at the financial institutions fell by 5.3 points to 110.8 points. This low level is expected to persist in the current quarter. The sub-index for the service providers also fell by 3.4 points, though at 118.9 points it still remains at its third-highest level since the surveys began in 2007. However, a further downturn is expected in the current quarter.

Financial institutions show neutral sentiment on employee numbers

After the brief period of job cuts at the financial institutions in the second quarter, the employee numbers sub-index rises by 3.6 points and now signals a neutral sentiment at 100.1 points. As expected, the growth in employee numbers at the service providers has slowed. However, even after falling by 8.4 points, the corresponding sub-index remains at a good level of 117.9 points. As for the current quarter, the service providers expect employee growth to decline further, while the financial institutions are forecasting 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 survey: Artificial intelligence will be one of the core topics of the financial industry in the future

CFS survey: Artificial intelligence will be one of the core topics of the financial industry in the future – More initiatives to inform and educate the public would be beneficial

The German government has decided to invest three billion euros in the funding of artificial intelligence (AI) by 2025. There are also talks planned with the federal states and partners from industry to stimulate further investment. The main goals include making Germany and Europe a leading location for AI technologies and ensuring future competitiveness.

Despite the positive signals from the German government, a recent survey by the Center for Financial Studies found that the majority of the German financial industry (84% of respondents) doubts that most decision-makers in business and politics are precisely aware of the importance of artificial intelligence. Digitalisation in general and AI in particular are terms frequently employed in public discussions, although many people have only a vague idea of what these topics entail. Given the importance of these trends, a clear majority (86%) of the German financial sector is in favour of an initiative to inform and educate the public.

“We are living in a time of dramatic changes in the economy and the world of work. It is therefore essential to inform and educate people of all ages appropriately. I would like us to not only focus on schools, but to develop formats for adult education to address these key future topics,” said Professor Volker Brühl, Managing Director of the Center for Financial Studies, commenting on the survey results.

Artificial intelligence is very likely to revolutionise a whole range of industries over the next 10 years – 83% of respondents are convinced of this. Only 17% think that the importance of AI technologies is overestimated.

The financial sector is already heavily influenced by artificial intelligence, and the new technology has the potential to transform financial processes. Accordingly, 90% of German financial industry respondents said they expect AI technologies to be one of the core topics for their industry in the future.

“German banks must make substantial efforts if they are not to lose out in the field of artificial intelligence. Only a few banks are pursuing a genuine AI strategy today,” Professor Brühl adds.

When asked about the key future areas of application for AI in banking, 77% of respondents cited central functions (risk management, controlling etc.), closely followed by asset management (76%) and retail banking (73%). In addition, 53% mentioned the capital markets business. Only 36% of respondents regard corporate banking as a relevant area of application.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., underlines: “When it comes to AI, in international comparison the gap is enormous. According to a survey by management consultants Asgard and Roland Berger, there are only 106 AI start-ups in Germany compared with 383 in China or around 1,400 in the USA. The German government’s program is late to the game, but not too late. In order to catch up, it is now necessary to cooperate intelligently with start-ups and join forces in the Financial Centre Frankfurt.”

 

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.

FMF welcomes Brexit agreement – Relocation of €750 to 800 billion in assets to Frankfurt expected

The Financial Centre initiative Frankfurt Main Finance (FMF) welcomes the agreement reached last weekend between the European Union (EU) and the United Kingdom (UK). For it provides much more clarity, albeit not yet definitive. FMF also hopes, in the interests of all concerned, that the British Parliament will ratify the treaty on 11 December. However, a ratification is not certain, and a hard Brexit has not yet been averted. In addition, the European Court of Justice (ECJ) will have to decide whether Article 50 can be revoked before the end of its deadline. Thus, there is still hope that the UK could remain if the ruling of the European Court of Justice confirms this. Still, the probability is rather low.

“This makes it clear for financial institutions that the Brexit is coming. While it has become somewhat less likely, the extreme scenario of a hard Brexit without a deal in place cannot be ruled out due to the uncertain majority in the British Parliament. On the other hand, it cannot be completely ruled out that the UK will remain in the EU, but this should be regarded as highly unlikely. The path is now set for the financial institutions. The Brexit plans are being implemented,” says Hubertus Väth, Managing Director of Frankfurt Main Finance.

Based on a speech by Danièle Nouy, President of the Single Supervisory Mechanism of the European Central Bank (ECB), we know that 37 financial institutions, banks and securities trading banks have applied to the ECB for new licences or extended existing ones and have already received them or are likely to receive them shortly.

30 of these institutions have chosen the Financial Centre Frankfurt for their European headquarters. Since several of the banks will establish branches in multiple locations, FMF believes the actual figures will ultimately add up to more than the 37 mentioned by Ms Nouy. However, Frankfurt also benefits from this distribution since around half a dozen financial institutions that have opted for locations in other EU countries are nevertheless significantly expanding their presence in Frankfurt.

“All in all, we expect a transfer of 750 to 800 billion Euros in assets from London to Frankfurt, the majority of which will be transferred in the first quarter of 2019,” says Väth. “It will not remain that way.”

“As it currently stands, banks face the decision of either relocating only what is absolutely necessary or preparing for the relocation of their entire business,” Väth continues. The institutions have found different answers to this question. “As long as uncertainty persists, most institutions are likely to prefer the minimum solution. In any case, it is clear that considerable second-round effects will follow.”

FMF sees the bill to relax dismissals protections for high-income risk carriers as an important step. “Politicians made promises and delivered on them. Internationally, this is being observed very closely as it shows that the Financial Centre is being supported.”

“Accordingly, Frankfurt Main Finance believes that the second-round effects will be significant. We stand by the potential of up to 10,000 jobs moving to Frankfurt which we estimated on day 1 after the Brexit referendum. However, there are signs of a second transition phase, which is expected to last until the end of 2022, and thus a further delay. The originally expected 5 years for the relocation of jobs from the time of the referendum in June 2016 will now become 8 years.”

A significant factor in financial institutions’ decision to relocate business to the Financial Centre Frankfurt was the willingness signalled by German politicians to reconsider the issue of labour protection for risk carriers. Following its inclusion in the coalition agreements, the draft law, which is tailored specifically to risk carriers, is being consulted in the ministries. “Politicians have listened, promised and delivered,” says Väth. “This is a clear sign that the banks’ relocation to Germany is desired. It is a sign that is seen and appreciated.”

Frankfurt Christmas Market

Regional specialities and a festive sea of lights: The Frankfurt Christmas Market attracts visitors from around the globe

The Frankfurt Christmas market has a long tradition and is one of the oldest Christmas markets in Germany. Up to the year 1393 it can be proven that markets took place in Frankfurt on Christmas. The traditional centerpiece of the market is the Römerberg, which with its historic half-timbered houses provides the backdrop for one of the country’s most beautiful and largest Christmas markets. The approximately three million visitors can enjoy the festive atmosphere between the city center and Römerberg from November 26 to December 22, 2018.

The highlight of the opening ceremony will be a live-concert of the Frankfurt Opera on November 26. And until  December 22, the musical offer ranges from the performance of international Christmas carols, the playing of the tower musicians of the Old St Nicholas Church to the big ringing of the city with the simultaneous ringing of 50 bells.

To celebrate its completion, the outline of Frankfurt’s newly rebuilt Old Town can be found on the new 2018’s Glühweintasse. Those wishing to secure one of the very first cups will be able to purchase it from 26 November at the Tourist Information Römer and Hauptbahnhof, as well as directly at the market in the Frankfurt Information Hut.

Frankfurt Christmas Market - © #visitfrankfurt, Holger Ullmann

Frankfurt Christmas Market – © #visitfrankfurt, Holger Ullmann

 

Over 200 Christmas stalls

Over 200 Christmas stalls attract visitors with lovely products and treats. In addition to the classic roasted almonds, mulled wine and sausages, you can enjoy typical Frankfurt Christmas specialties such as Bethmännchen (“a little Bethmann”), hot cider and Quetenkännchen. In addition to the culinary diversity, visitors can expect classic Christmas market decoration and folk art articles, as well as modern handicrafts and typical Frankfurt goods such as ‘dippe’ (ceramic pot) and earthenware products. On the adjoining craft market in the Roman halls and the St. Paul’s Church, there is also the opportunity to search for an extraordinary Christmas present.

At the gates of the city there are also a variety of romantic Christmas markets in Odenwald, Rheingau, Taunus and Wetterau.

Christmast market tours

On December 16, the Christmas market tour “Glühwein, Geschichten & Gebäck” (Mulled wine, stories and pastries) will be offered in many languages as well as for the blind and visually impaired and the Frankfurt Christmas market specialties will be presented. Also stories about the historic and modern Frankfurt, the Christmas market and famous Frankfurt personalities are part of the tour.

Another highlight is a guided tour through the winding alleys of Frankfurt’s new Old Town. A German-speaking tour starts at 2 p.m. every day. The tour through the new Old Town is also offered to English-speaking Christmas market visitors. On six dates, starting from 1 December, English-speaking guests can enjoy the Frankfurt Old Town flair. Visitors can expect an exciting mixture of new buildings and reconstructions.

Rosa Weihnacht

At the Frankfurt Hauptwache (Main Guard) there are more Christmas market stalls, which extend the classic Christmas market area up to the shopping street Zeil and thus form a passage to Christmas shopping. On Friedrich-Stolze-Platz there is also the so-called “Rosa Weihnacht”, which is organized by the gay community of the Rhine-Main region and creates a special atmosphere with its colorful lights, unusual decoration and design.

More information.

 

Photo: © #visitfrankfurt, Holger Ullmann, www.frankfurt-tourismus.de

Green and Sustainable Finance Cluster_ Grüneburgpark Frankfurt

Green and Sustainable Finance Cluster Germany

Strengthening efforts for a sustainable future in the Financial Centre Frankfurt

A strong and responsibly acting financial sector is of utmost importance to a sustainable future – just filling the forecast gap in the level of emissions avoidance necessary for Germany to meet international obligations by 2050 requires €530 bn in investments alone, as a report published by the Green and Sustainable Finance Cluster Germany (GSFCG) points out. Read more

Frankfurt Main Finance continues to grow: six new members join the Financial Centre initiative

Frankfurt am Main – The financial centre initiative Frankfurt Main Finance is proud to welcome six new members, raising the membership number to 60. PricewaterhouseCoopers (PwC), The Boston Consulting Group, CBRE GmbH, Frankfurt School of Finance & Management and Norton Rose Fulbright LLP join as sustaining members. In addition, Werthstein GmbH joins as a FinTech member.

Frankfurt Main Finance leverages the influence of its now 60 members –  representatives from Frankfurt’s financial sector, research institutes, public administration and the flourishing FinTech sector –  to advocate for the Financial Centre Frankfurt and provide high-calibre dialogue platforms. Through their membership and engagement, all members demonstrate their close relationship to Frankfurt and desire to position Frankfurt amongst the top international financial centres.

We are excited to welcome the new members. Their commitment to the Financial Centre Frankfurt and our continuous growth in membership reflects a high recognition for our daily efforts to represent and position the Financial Centre internationally,” says Dr. Lutz Raettig, President of Frankfurt Main Finance. “This 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.

The new member PwC is active in the areas of assurance, advisory and tax services with 250,000 employees in 158 countries – including the Financial Centre Frankfurt. “Through our membership in Frankfurt Main Finance, we not only want to strengthen our commitment to Frankfurt as Germany’s leading Financial Centre, but also actively contribute to the local community. The location is developing in a highly dynamic manner. We would like to contribute to this positive development and further strengthening of Frankfurt. For this reason, we look forward to the exchange with the initiative’s members, with universities, banks and all other actors in the Financial Centre Frankfurt,” says Clemens Koch, Head of Financial Services and member of the management board at PwC Germany.

As a trusted partner for all real estate topics, CBRE supports real estate investors and occupiers worldwide. Since 1973, CBRE Germany has been headquartered in Frankfurt am Main. “With our membership, we are very pleased to be able to help support the many advantages of the Financial Centre Frankfurt from the perspective of the real estate industry. Numerous project developments offer ever more modern and innovative office space, allowing the skyline to continue to grow. Despite the decreasing vacancy rate, there is still excellent and representative office space available, even for demands for larger spaces,” explains Carsten Ape, Head of Office Leasing Germany at CBRE.

As Frankfurt School of Finance & Management, we effectively have the Financial Centre in our name. As a business school, we set new standards with excellent research – for example in the fields of artificial intelligence, blockchain or sustainable finance. In addition, on our campus we train the specialists and executives needed to ensure that Frankfurt continues to be innovative and successful. A strong Financial Centre is essential for us, which is why we are committed to Frankfurt Main Finance,” says Professor Dr. Nils Stieglitz, President of Frankfurt School of Finance & Management. The research-led business school, accredited by EQUIS, AMBA and AACSB International, offers comprehensive educational programs on finance, business and management topics. Frankfurt School’s Master of Finance is the only finance master offered by a German university in the current Financial Times ranking.

Norton Rose Fulbright LLP is a global law firm providing the world’s preeminent corporations and financial institutions with a full business law service. “Frankfurt Main Finance is the voice of the Financial Centre Frankfurt. We support the initiative because it effectively positions Frankfurt in national and global competition,” explains Dr. Oliver Sutter, Partner at Norton Rose Fulbright LLP.

As a digital wealth manager, Werthstein offers its clients the opportunity to develop an individualised portfolio that is broadly diversified in terms of risk aspects and specialised in investments in current economic, technological or social trends. “The financial centre initiative Frankfurt Main Finance stands for the openness to innovation and drive that FinTechs bring to wealth management. That is why we are closely associated with the initiative,” comments Felix Röscheisen, general representative of Werthstein GmbH.

 

Eurex Clearing to expand Partnership Program to Repo and Foreign Exchange

Eurex Clearing plans to expand its Partnership Program to cover the repo and OTC foreign exchange (OTC FX) segments. The design of the program extension is complementary to the OTC interest rate derivatives segment, which started in January 2018. As part of its partnership program Eurex Clearing shares governance and economics with the most active program participants.

For the repo segment, the aim of the program is to increase choice and efficiency for market participants in Special Repo and General Collateral instruments and to foster adoption and growth in the dealer-to-client repo business.

The new FX segment of the Partnership Program is designed to deliver the benefits of clearing to OTC FX markets, which are still largely uncleared today. Eurex Clearing is currently working with market participants to be the first major clearing house to offer a comprehensive cross currency swap clearing service.

Market participants can now register their interest to join the new program components for a planned start in Q1/2019. Commerzbank, Deutsche Bank, J.P. Morgan and Morgan Stanley have expressed an early interest to join both new segments – Repo and OTC FX. In addition, Citigroup, DekaBank and LBBW have indicated their interest to participate in the Repo program. Further details of the program extension will be made available to interested market participants in due course.

Erik Müller, CEO of Eurex Clearing: “The extension of the Partnership Program further enhances choice and innovation in the marketplace. Market participants now can tap the full benefits of Eurex Clearing’s integrated value proposition across fixed income derivatives, Repo and FX markets.”

Charles Bristow, Co-Head of Global Rates Trading, J.P. Morgan: “J.P. Morgan has been an early supporter and design partner for the OTC interest rate derivatives clearing segment of the Partnership Program. We welcome the planned extension of this successful program which is aimed at broadening market participants’ clearing options for the new asset classes and increasing resiliency.”

Webniar Moving to Frankfurt

Moving to Frankfurt – What Germany’s financial capital has to offer

If you or your company are thinking about moving to Frankfurt, you surely have a number of questions. Some, of course, concern legal questions, but some others will be of a more practical nature. Practitioners from Dentons in Frankfurt and Hubertus Väth, Managing Director of Frankfurt Main Finance, invite you for a webinar to answer some of your questions. You can register for the Moving to Frankfurt Webinar here.

The speakers of the Moving to Frankfurt Webinar will be:

  • Hubertus Väth, Managing Director, Frankfurt Main Finance
  • Amy Kläsener, Partner, Dentons
  • Bernhard Gemmel, Partner, Dentons
  • Frank Lenzen, Partner, Dentons (Frankfurt)
  • Michael Huertas, Partner, Dentons

Join the event for a fast-paced, one-hour webinar that will bust open some of the myths typically related to living in Frankfurt and doing business within and outside of Germany.

Topics to be addressed include:

  • What’s the lead time to setting up business and residency in Germany?
  • What are the top tips when negotiating a business or residential rental contract?
  • Are German/EU labor market checks required for certain employees and positions?
  • If employed in Germany, how mobile am I across the EU?
  • Why is German employment law geared towards going to court following dismissals?
  • How different is the German and EU financial services regulatory environment, and will I have to comply with double rules?

Date: Tuesday, November 06, 2018

Time: 04:00 PM Central European Time

Duration: 1 hour

Find more information and registration here.