The votes have been counted and the UK has decided to leave the EU. But how will this decision affect the Financial Centre Frankfurt? Frankfurt Main Finance’s Hubertus Väth sat down with FINANCE-TV to discuss how Brexit will affect European financial centres and what Frankfurt has been doing capitalize on this opportunity. With some experts predicting that 100,000 jobs could leave London’s financial district, there is a lot at stake and Frankfurt Main Finance had all hands on deck in the hours rigth after the announcement. In cooperation with their partners, Frankfurt Economic Development and FrankfurtRheinMain GmbH, Frankfurt Main Finance launched a website, welcometofrm.com, an information hotline and a social media campaign on LinkedIn and Twitter targeted at decision makers in London’s financial sector. Watch Hubertus Väth’s full interview in the video below (German).
In his keynote address at the Goethe University’s Center for Financial Studies on July 13, 2016, Dr. Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank (German National Bank), explained what the Brexit means for European banks. Although the conditions of the UK’s exit have yet to be negotiated, Dr. Dombret made three key conclusions:
- Financial institutions have to prepare for a scenario in which euro-denominated trading and clearing is unlikely to have a future outside the EU.
- Regarding the merger between Deutsche Börse and London Stock Exchange, the referendum outcome has even strengthened the economic rationale. But in order to reap the benefits, contracting partners should now invest in a well-balanced governance structure.
- Financial actors in Europe have so far succeeded in digesting the somewhat surprising referendum result. Even ongoing volatility should not serve as an excuse to bypass the pillars of financial stability we have only just set up in the EU.
Additionally, Dr. Dombret lamented the loss of his British colleagues, explaining, “I –probably speaking for most, if not for all of my German colleagues – will greatly miss our British counterparts in European institutions; not at least because of their orientation towards stability and free market economy. But, fortunately, as central bankers, we will continue our collaboration at many other levels such as the G7, the G20, the IMF and the BIS.”
Photo Credit: Deutsche Bundesbank / Frank Rumpenhorst
According to a recent study by EY Real Estate, surveying 555 respondents from the German real estate branch, the German and Frankfurt real estate market will be one of the main beneficiaries of the UK citizens’ vote to leave the EU.
The survey shows that 57% of respondents predict the Brexit having a positive effect on German real estate. According to the responses, the transactions volume, as well as the purchase and rental prices, are poised to increase. This increase in residential prices will specifically affect Frankfurt according to 86% of respondents. In addition, 79% predict an increase in commercial real estate prices.
These predictions are based on the expectation that Frankfurt will grow in importance following the UK vote to leave the EU. In fact, 72% of respondents expect the Financial Centre Frankfurt to benefit the most from the UK’s exit from the EU. Dublin follows in a very distant second with 13% and only 6% of respondents see Paris profiting from the Brexit.
Following a meeting of the Financial Centre Cabinet, the German news programme reported on Brexit as an opportunity for Frankfurt. “Admittedly, Frankfurt isn’t considered as lively as London. Nevertheless, the city in Hesse estimates that the Brexit could bring 10,000 banking jobs from the Thames to the Main.” From Oliver Feldforth and Sandra Scheuring, Hessischer Rundfunk.
A recent survey by the Boston Consulting Group (BCG) examines financial centres which could be viable alternatives to a post-Brexit London. Nearly 360 decision makers from banks in the United Kingdom, USA and Germany evaluated nine potential locations on fourteen criterion, including but not limited to infrastructure, business environment, stability, lifestyle factors, access to markets and institutions. The results of the online survey, conducted in June 2016 before the UK’s EU referendum, shows the Financial Centre Frankfurt am Main leading the ranks. Dr. Wolfgang Dörner, Senior Partner and Director of BCG’s Frankfurt office, explains that “the economic and political stability in Germany combined with access to a highly qualified talent pool make Frankfurt am Main a leading choice in location.” According to the study, around twenty percent London’s financial services jobs could shift to other global financial centres. Uncertainty still prevails for most in London’s financial centre, but one thing is certain: Frankfurt is ready and well positioned to welcome those in need of a new home.
The coming EU referendum in the United Kingdom has been a hot topic in all media channels. A Brexit will have many consequences for the UK and Europe. When it comes to how a Brexit could affect the Financial Centre Frankfurt, Hubertus Väth, Managing Director of Frankfurt Main Finance, is a frequently requested and competent commentator.
Below is a selection of interviews over the past two months regarding Brexit.
- ZDF heute on 22.06.2016
- Deutschlandfunk on 22.06.2016
- Newstalk ZB 22.06.2016
- 17.30 Uhr SAT1 on 20.06.2016
- Financial Times on 15.06.2016
- ARD Tagesschau on 14.06.2016
- Badische Zeitung on 12.06.2016
- hessenschau on HR-Fernsehen on 11.06.2016
- ARD Wirtschaftsmagazin plusminus on 01.06.2016 titled „Goodbye Großbritannien? – Wo die Deutschen on Brexit profitieren“
- Frankfurter Neue Presse on 30.05.2016
- BBC News on 09.05.2016
- Südwest Presse on 05.05.2016
- Stuttgarter Nachrichten on 04.05.2016
- Frankfurter Neue Presse on 08.04.2016
- Frankfurter Allgemeine Zeitung on 21.03.2016
Hubertus Väth clearly states, “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. We estimate that jobs relocating to Frankfurt could number in the tens of thousands.”
Frankfurt is not only a German Financial Centre, but also a major European hub. The Financial Centre is home to the European Central Bank and is considered the centre of monetary stability in Europe. The exchange platforms and IT systems in Frankfurt are internationally recognized for their reliability and security. Frankfurt is also an important centre for European Financial Supervision, home of the European Insurance and Occupational Pensions Authority (EIOPA) and the European Systemic Risk Board. Frankfurt is well-equipped as a stable Financial Centre to embrace those looking for a new base of operations within the Eurozone. Frankfurt stands ready with a high-capacity real estate market as well as an excellent range of service providers, particularly in the areas of accounting, legal, communications and IT. For example, in Frankfurt you will find the DE-CIX internet exchange hub, over which more than 40% of the European internet traffic flows. Compared to the lasting instability in Great Britain, Frankfurt represents openness, stability, capable infrastructure and favourable conditions.