Helaba Financial Centre Study “In Pole Position for Brexit Bankers”

The latest financial centre study by Helaba’s Research unit, which was published today, shows that the German financial centre is in pole position when it comes to competing for businesses and workers looking to relocate from London. A number of banks have already announced that they will relocate jobs from the river Thames to the river Main, which will have an impact on employment figures: “We anticipate that at least half of all financial sector jobs that are leaving London will be relocated to Frankfurt. Over a period of many years, this would equate to a minimum of 8,000 employees. Therefore, by 2019 we see employment in Frankfurt’s financial sector rising by 4 percent to around 65,000 (end of 2016: 62,400). This is despite a simultaneous consolidation process in the German banking industry that is set to continue”, explains Dr. Gertrud Traud, Helaba’s Chief Economist and Head of Research, at the presentation of the study in Frankfurt.

A novelty of Helaba’s long-running financial centre research in this study is its own regional employment aggregate – financial sector employment within “BIG FFM”, an area that was created by transposing Greater London onto the area around Frankfurt. The following picture emerges from this comparison: At the end of last year, around 118,000 people subject to social security contributions were employed in the sector of financial and insurance services, which compares to approximately 360,000 in Greater London. Employment density (in relation to the population), however, is at the same level of just over 4 percent in both conurbations.

The role of the German financial centre as the favourite in the Brexit-related restructuring process is no coincidence: Frankfurt is the leading financial centre in Continental Europe. In terms of relocating jobs from the river Thames to the river Main, the following locational qualities that Frankfurt possesses are particularly significant: the stability and strength of the German economy, the headquarters of the ECB in its dual function as central bank and supervisory institution, the role of the Rhine-Main area as a transport hub with good infrastructure, relatively affordable rates for leasing office space as well as a high standard of living that also offers a varied range of recreational activities in the city and its green environs.

“Since we created our financial centre ranking in 2016, Frankfurt’s relative attractiveness has risen even further”, explains Helaba’s financial centre expert, Ulrike Bischoff. In contrast, it is already undeniable that the City of London has been weakened by Brexit. The continuing high level of uncertainty over future arrangements in the United Kingdom means that it is losing favour among foreign financial centre participants. On top of that, the collapse of the attempted merger between Deutsche Börse and the London Stock Exchange is positive for Frankfurt, since the strong Frankfurt exchange is now able to go its own way. Furthermore, the German financial centre could become even stronger as the European centre for supervision if the EU-wide banking supervisory authority EBA is relocated to Frankfurt.

The relocation of jobs to Frankfurt is shifting the focus onto the regional property market and city’s educational infrastructure, in particular. “In view of a still ample vacancy rate and a number of construction projects underway, satisfying additional demand on the office market should be possible without any difficulty”, expects Helaba’s real estate analyst Dr. Stefan Mitropoulos. On the residential market, though, there is no appreciable vacancy rate. However, the considerable rise in new construction activity, projects planned for the next few years as well as the abundant land reserves available in the surrounding area suggest that there will not be any significant tightening on Frankfurt’s housing market as a result of Brexit. Apart from the real estate market, the range of educational facilities is a key locational criterion. The Frankfurt financial centre region already offers a broad array of international educational establishments that has visibly grown over the last few years. In view of strong demand for school places even beyond the additional demand created by Brexit, there will need to be a further expansion in the infrastructure for children of all ages, including all types of schools.

Dr. Gertrud Traud draws a positive conclusion from the study: “Despite the challenges posed by the impending influx of employees from the river Thames to the river Main, Brexit represents a unique opportunity to improve Frankfurt’s position even further in the competition between international financial centres.”

Download the full study from Helaba here (German).

 

Brexit brings up to 88 thousand new jobs in the Rhine-Main region

WHU study quantifies the Brexit impact on the employment market

New jobs in the banking sector – that’s the expected result of impending relocations from London to Frankfurt. As early as June 24th, 2016, one day after the referendum, Frankfurt Main Finance estimated the potential repercussion of a Brexit decision to be up to 10 thousand new jobs for Frankfurt within the financial sector and its directly related services. Today, some people already regard this figure as too conservative. A job motor can also be expected in other fields, according to the findings of a study by WHU – Otto Beisheim School of Management carried out on behalf of Frankfurt Main Finance. “It will be the multiplier effects on many areas of day-to-day life that will lead to a significant growth in employment above all in the Rhine-Main region,” explains Professor Lutz Johanning, who conducted the study together with Moritz C. Noll from the Chair of Empirical Capital Market Research. In this interview, both academics give us a deeper insight into the underlying calculations.

Prof. Johanning, what exactly is analysed in your study?

Lutz Johanning: We looked at the effects of the relocation of banking jobs in the wake of the Brexit decision on the employment market as a whole – for the City of Frankfurt, the towns and cities in its direct vicinity, and the Rhine-Main region. In the analysis, our focus was on the multiplier effects, i.e. what growth will result for other sectors and industries from an addition to the number of banking jobs. And the study shows that this effect is 2.1 to 8.8 times higher, depending on the area under consideration. Therefore, in the most optimistic case, if we assume ten thousand new bank jobs, up to 88 thousand new jobs can be created during the following four years in the Rhine-Main region.

Prof. Lutz Johanning: “The relocation of jobs doesn’t occur in isolation. People move their lives into a new city – with everything that involves.”

That’s a huge figure. How do you arrive at that result?

Moritz Noll: We extrapolated the existing statistical data on the employment market in Frankfurt and the region into the future with the help of an empirical model, taking the effects of the Brexit into account. To ascertain and arrive at meaningful figures for the purposes of further planning, we placed a high priority on two factors. Firstly, a valid data basis has been very important for us. Our study is therefore based on employment market data from the German Federal Employment Agency (BA) covering the past nine years. Secondly, we looked for statistical models that have already been effectively applied in the scientific community.

Moritz C. Noll: “Even though the Brexit is a unique occurrence, scientifically based models still exist that enable the repercussions for the employment market to be reliably assessed.”

Where did you find an appropriate solution? After all, the Brexit is an unprecedented event.

Noll: The Brexit is indeed unprecedented, but not the fact that jobs are moved to a new location as the result of changed basic conditions. There are, for instance, well-founded scientific analyses for the energy sector in the USA – bear in mind the topic of fracking. The resettlement of jobs to new locations is quite common in this context. The resulting repercussions, not only for the primary sector affected, but also in terms of the overall impact on a region have been frequently examined during the last few years. These models allow specific assumptions to be derived on which we have based our study.

Johanning: The indirect effects can be quantified with this approach. If a job at Bank X is moved from London to Frankfurt, this is not an isolated process. Rather, the person who occupies this position relocates his life into a new city – with everything that involves. He or she usually comes with a family, which means that all the corresponding needs have to be met. This begins with quite simple issues such as residential needs, schooling, training, and the requirements of daily consumption. But it also has wider structural implications – the keywords here are infrastructure, the educational system, the market for houses and flats.

Prof. Lutz Johanning: “The Rhine-Main region in particular will profit from the growth in jobs. Most of the additional jobs outside of the financial industry are more likely to occur in the areas around Frankfurt.”

Why are you so sure that the affected bankers will be transferring their primary place of residence to Frankfurt? After all, London isn’t all that far away.

Johanning: The same discussion took place a number of years ago in connection with the European Central Bank employees. The question then was also whether people will actually be moving to the Rhine-Main region or whether they will just be here to work. Experience shows that they come here to work and to live. That’s why this particular context has provided a best-practice example for many years, and this has served as an orientation for us in the study.

You have differentiated in your analysis – between Frankfurt, its immediate environs, and the region. What does this distinction reveal?

Johanning: Frankfurt will profit directly from the new jobs in the banking sector. That’s not a regional issue. The central office sites will be found in the city centre. Consequently, the effect here on other parts of the economy is also modest, around 2.1- to 3.4-fold. Bank-related services will also benefit during the course of development; but these services are often not located directly in the city, but in the immediate surroundings like Eschborn, Offenbach or other neighbouring cities. In addition, many people are looking for somewhere to live somewhat outside of Frankfurt. That, in turn, will benefit the neighbouring municipalities as well as the entire region. The larger the radius drawn, the more differentiated the effects and the greater the multiplier effect. Optimistically speaking, ten thousand new bank jobs in the city can generate up to 88 thousand new jobs in the Rhine-Main region.

The study mentions two models. What does that mean exactly?

Noll: We’ve made use of two models to assess the impact of the ten thousand new jobs in the financial sector on all the other industries. Model 1 takes a factor into account that dampens the growth effect to a greater degree. Model 2, on the other hand, does not include this factor, and the growth is estimated to be higher overall as a result. It was important for us to present the entire spectrum of possible results in the study.

You know the statistics in detail. In which industry will the effects have the greatest impact?

Johanning: It should be said to start with that Frankfurt is a region with a very high growth rate – even without the Brexit. The highest growth rates over the past few years have been recorded in the sectors of logistics, real estate and business services. These growth industries will be given an additional push through the Brexit effect. What cannot be deduced from our quantitative model, however, is which structural changes within the individual industries will lead to greater or less growth over the next few years.

Noll: In a further step, we examined with the help of our models how the long-term job growth rates differ with and without the Brexit. As a result, we were able to show that the long-term growth path is changed by an initial shock, i.e. the relatively sudden event of additional jobs flowing into the financial industry caused by the Brexit. This means that job expansion throughout the employment market as a whole can be significantly higher in the long term in the Brexit case than in a case without additional Brexit jobs. One can therefore see that the growth effects on the employment market can be markedly higher than the initial effect might lead us to expect. So there’s still room for growth and untapped potential.

Moritz C. Noll: “If we also take the long-term effects into account, even better figures are possible.”

So the upshot is even more growth for an already prospering region. Have you also been able to quantify in the study how local government tax revenues will change as a result?

Johanning: We’ve attempted to estimate this effect as well with the aid of a simple projection, at least for the Frankfurt city area. However, these results should be considered with caution since they are based on the previous results from the employment market forecasts, which inevitably results in additional inaccuracies. We looked at the local government share of the income tax, the value-added tax and the local business tax. In summary, we estimate that the City of Frankfurt will be able to earn between EUR 136.2 and EUR 191.9 million in revenue every year through the three above-mentioned tax forms as a result of the additionally created jobs.

Thank you for the interview.

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

Picture credits: fritzphilipp photography 

“We are doing everything we can to create additional living space”

The Financial Centre Frankfurt is poised for a sudden upsurge in its population. How can enough living space be created to meet such an influx? Here is an interview with Mike Josef, head of the city planning department.

Experts are anticipating a figure of 6,000 to 10,000 new jobs that will come about alone in the banking sector in the wake of many companies relocating from London to Frankfurt. How is the City of Frankfurt dealing with the concurrent need for more housing space?

Mike Josef: We are boosting residential construction, first of all by allocating areas as new building zones. Whatever happens in detail, Frankfurt am Main is expecting a strong population growth over the next few years. Depending on the projection one believes, the expected figures for the year 2030 are in the direction of over 840,000 inhabitants, but they differ from one another by more than 100,000. This shows the level of uncertainty endemic in such forecasts. Moreover, the estimated number of jobs that could be relocated to Frankfurt is subject to change. For those coming to Frankfurt in the wake of the Brexit decision, we have built up an extensive range of offers in this segment over recent years. Of prime importance now is to provide the broader middle class with affordable living facilities and offer these people a future in Frankfurt. That’s why I’m making a special effort to promote the building of low-cost homes and apartments, a segment where construction has been disproportionately low during the last few years.

A new city district is being planned near Steinbach. In terms of the resulting living space and the time scheduled for the project, is this enough?

Josef: It goes without saying that one element alone is not sufficient to create sufficient living space for what is a growing Frankfurt. We are therefore exploiting all options at our disposal to create additional homes. This includes inner urban development, i.e. the conversion of office buildings or entire land areas, as we are doing in the former Niederrad office district or setting in motion on the Römerhof. Further options being deployed are redensification, where this is compatible for the environs and the environment, and the consolidation or border realignment of existing city districts. Because this is not enough, we also have to expand outwards, i.e. we have to build on previously undeveloped sites.

What other aspects have to be considered in such a project as regards infrastructure?

Josef: It’s important that the infrastructure is complete and ready to use before the first residents move in: roads, squares, parks and local public transport must be available, and this also applies to the social infrastructure. This embraces, for example, day nurseries, schools, youth centres and facilities for senior citizens, along with the necessary cafés, bars and restaurants and local shopping amenities. We must now determine the precise extent of the infrastructure facilities we need in the new district during the course of our further planning.

Thank you for the interview.

Picture credits: City of Frankfurt

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

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

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

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

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

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

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

Happy Birthday Deutsche Bundesbank!

The German Central Bank, headquartered in the banking centre Frankfurt am Main, is celebrating its 60th anniversary.

Almost 13 billion German marks (DM) are still in circulation – one of the reasons is because many Germans are still hanging on to the coins or notes from the old currency as a souvenir. The cash can still be exchanged in the branches of the Deutsche Bundesbank, an institution that has watched over the stability of the DM as the monetary watchdog for decades.

With the introduction of the euro as German currency, this responsibility has passed into the hands of the European Central Bank (ECB). But the Bundesbank and its almost 10,000 employees continue to supply banks with fresh cash, sort out counterfeit money, process payment transactions both at home and abroad and supervise the activities of most of the banks in Germany. It also holds and manages the country’s gold reserves.

The Deutsche Bundesbank is celebrating its 60th anniversary this year, and to mark this jubilee it has recorded everything one needs to know about its inception and development in brief yet informative little films. On the Deutsche Bundesbank website, anyone interested can also find key dates, facts and figures about the central bank and has the chance to view a range of historical photos and film footage.

Picture credit: Deutsche Bundesbank

 

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

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

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

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

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

Accelerator Frankfurt – second Demo Day a complete success

Start-ups from all over the world have presented their entrepreneurial ventures to investors and potential customers on July 13th in Frankfurt. The Demo Day was the highlight of a four-month accelerator programme in which a total of eight young companies went through a tight training schedule.

Accelerator – long a familiar concept in the start-up scene. It is mostly backed by institutions that support young entrepreneurs and want to kick-start and accelerate their development process with the help of intensive coaching. “For an entrepreneur, courage alone is not enough, you also need 100% commitment,” warns Ram Shoham, the founder of Accelerator Frankfurt. Accordingly, the programme offered for new company founders is extremely demanding and highly challenging. Covering topics such as legal and tax issues, financing, communication, digital marketing and strategic planning, the promising business ideas are elaborated and matured in more than 200 hours of consultancy sessions to make them ready for presentation to investors and potential customers. What start-ups normally need around two years to accomplish can be effectively achieved here in just four months.

International start-ups present their concepts to investors and potential customers

A great deal is demanded in the programme from young entrepreneurs. Those who successfully pass through the application process come to Frankfurt. Together, they all work in an open-plan office, they meet together with mentors who have a lot of experience in the fields of industry, start-ups and finance, they are individually assigned a lead mentor, and they have the space to develop their business concept in meticulous detail. After all, every aspiring company wants to score points at the Demo Day.

The second wave of the Accelerator programme went into its final round in Frankfurt on July 13. Seven of the total of eight start-ups – Adjesty (Adtech, Israel), Aeroplan (Insurtech, Israel), AsiaFundManagers  (Fintech,Germany), EcoKraft (Fintech, Germany), Norma (Cybersecurity, Korea), Smart Mile Solutions (Smart Cities, Netherlands) and Travel to Live (Traveltech, Canada/Sweden) – have successfully mastered their pitch. In addition, three start-ups from the VABN, a joint workspace in Frankfurt for business start-ups, also presented their ideas. The many international start-ups at the Demo Day underline the fact that Frankfurt is an attractive location for ambitious, up-and-coming start-up entrepreneurs from all over the world. There was also great interest from the other parties taking part in the event: around 200 investors were there, including many from abroad, for example venture capital lenders from Israel, along with representatives from the Ministry of Economics in Hesse and from the state’s economic development agencies.

More information about the Accelerator Day

The event was a complete success. Accelerator founder Shoham, who, together with co-founder Maria Pennanen, is enthusiastically committed to the objectives of this programme, is delighted with the results. He hosted the event together with Prof. Elmar Schütz, head of the VABN and co-organiser. The keynote address from Björn Weigel, co-author of “The Innovation Illusion”, also attracted great interest among those attending.

The next Accelerator programme will start on 25 September 2017. Those interested can find all the information they need about the application process here.

Picture credits: Jochen Biedermann, Accelerator Frankfurt

Mizuho is fourth Japanese bank to confirm move to Frankfurt

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

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

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

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

The press release of Mizuho Financial Group.

 

Brexit Folgen für Frankfurt. Bild: Union Jack flag and EU flag combined over iconic London landmarks - UK leavs the EU

CFS survey: One year on from the Brexit referendum

Financial industry still sees Frankfurt as the major winner / London to remain one of the top 3 financial centres / CFS warns against euphoria

According to a recent survey by the Center for Financial Studies, one year on from the Brexit referendum, a clearmajority of the German financial industry (86%) still believe that Frankfurt is the EU location that stands to benefit the most from Brexit. In addition, over two thirds of the companies surveyed (69%) expect London to remain one of the top 3 financial centres worldwide, even 10 years after Brexit. Only 14% of respondents believe one of the rival financial centres will emerge as the major winner. In this respect, the survey participants have more confidence in Paris and Dublin, whereas Luxemburg and Amsterdam are hardly expected to gain any significant location advantage.

“The survey underlines the particularly high expectations placed on Frankfurt to take advantage of Brexit. However, I would warn against getting carried away with the euphoria. Competition is very intense, especially with Paris. Substantial efforts are required on the part of the German and Hessian state governments, not forgetting the city of Frankfurt, to actually realise this potential,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the results.

The German financial industry is also united in its optimistic view on the specific question of how many extra financial sector jobs are likely to result from Brexit over the next five years in the Financial Centre Frankfurt. Of the survey respondents, 21% expect more than ten thousand additional positions to be created. Frankfurt Main Finance has viewed this as a realistic figure ever since the day of the referendum in the UK and expects a thousand new jobs to already be announced by the end of the current year. However, a larger proportion ofrespondents (45%) anticipate a figure in the range of five to ten thousand extra jobs. A further 33% predict between one to five thousand new jobs. Just 1% anticipate fewer than one thousand additional positions.

“Even if the Financial Centre Frankfurt hastaken the pole position, there are still around one hundred banks in London which are looking for a new home in the Eurozone. Only around twenty have made decisions. There is still a great deal to be done,” comments Hubertus Väth, Managing Director of Frankfurt Main Finance e.V..

Financial institutions in London are preparing to shift partsof their business from London to Continental Europe. When asked which region those institutions likely to shift the most jobs come from, 37% of respondents pointed to North America; 30% believe European firms will relocate the most jobs; 19% named the UK and 14% the Asia-Pacific region (APAC).

On the same topic, the majority of the financial industry (71%) anticipates a substantial relocation of jobsin the area of securities trading and settlement, followed by corporate finance and corporate banking (49%). In addition, 40% of respondents named the area of risk management and compliance. As for the asset management segment, 30% of respondents believe a substantial shift of jobs is realistic.

“In many quarters the potential relocation of the European Banking Authority (EBA) to Frankfurt is regarded as an important signal. Aside from proximity to the European Central Bank (ECB) being a pull factor in such location choices, the importance of the future home of the EBA is overplayed when it comes to location decisions of financial institutions. Issues of market access and infrastructure play a far more important role here,” said Professor Volker Brühl, Managing Director of the Center for Financial Studies, analysing the survey results.

CFS Index falls by 2.0 points

Revenue and earnings growth of financial institutions declines – Service providers expect the same for the current quarter / Financial industry continues to increase investment volume

The CFS Index, which measures the business climate of the German financial sector on a quarterly basis, falls by 2.0 points to 111.6 points. The declining rate of growth is primarily a result of smaller increases in revenues and earnings among the financial institutions. The service providers are expecting a similar development in the current quarter. On the contrary, the service providers inparticular report positive growth in investment. In addition, the financial institutions are continuing to reduce their job cuts and now, after implementing major personnel measures in the previous quarters, indicate an almost neutral business sentiment of 99 points.

“It is perhaps still too early to speak of a trend, but there is a growing impression that the financial institutions are making a comeback. Over several quarters now we can observe a constant pattern: increasingly positive expectations among the financial institutions coupled with decreasing values among the service providers – and this goes for all four components of the index: revenues, earnings, investment and employees,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, interprets the results.

The future international importance of the Financial Centre Germany is rated even more positively than just after the Brexit vote one year ago

The future international importance of the Financial Centre Germany, which has been rated very positively since the Brexit vote, rises by another 3.7 points in the third quarter of 2017 and now stands at 138.7 points, exceeding the previous high (136.8 points) reached shortly after the Brexit vote.

Dr. Lutz Raettig, President of Frankfurt Main Finance e.V. emphasizes: “We have already achieved quite a bit through our combined efforts. The Hessian government’s coordinated approach made a significant contribution towards our shared successes.”

Financial institutions record sharper decline in revenue growth, service providers are expecting the same for the current quarter

Growth in revenues/business volume in the financial industry is declining, but remains at a positive level. Among the financial institutions, in particular, this sub-index drops by 7.5 points to 106.4 points. The service providers record a smaller decline of 2.1 points and remain at a very good level of 124.5 points. For the current quarter, however, they are anticipating a sharper decline in growth, whereas the financial institutions expect revenue growth to begin to rise again.

Earnings growth of financial institutions falls back to first quarter level

The surveyed financial institutions are not able to maintain their strong earnings performance of the second quarter. The corresponding sub-index falls by 7.1 points to 105.4 points. However, they are expecting a rise in earnings growth in the current quarter. Among the service providers, earnings growth remains almost unchanged. The sub-index rises by 0.7 points to 118.6 points. However, a relatively sharp decline is predicted for the current quarter.

Investment volume among service providers reaches highest level since the survey began in 2007

The growth in investment volume in product and process innovations among the service providers rises by 11.7 points to a historic high of 123.5 points, though this is expected to decline significantly in the current quarter. The corresponding sub-index for the financial institutions also rises by 3.1 points to 116.7 points, and another sharper increase is expected for the current quarter. Both groups are therefore maintaining a very good level of investment.

Financial institutions continue to curtail job cuts

As observed since the start of the year, the trend among financial institutions to curtail job cuts continues. The corresponding employee numbers sub-index rises by 1.5 points to 99.0 points, which means it has almost reached the neutral level of 100 points. Regarding the current quarter, the financial institutions are expecting job cuts to increase slightly once more. By contrast, the service providers continue with a strong level of recruitment. The corresponding sub-index rises by 5.0 points to 118.6 points. However, the service providers are more pessimistic about the current quarter and expect weaker growth in recruitment.