Frankfurt am Main, November 18, 2024 – What role does Germany’s financial centre play in managing the transformation? This was the central question addressed on the opening day of Euro Finance Week by Henriette Peucker, CEO of the German Stock Institute, Eddy Henning, Executive Board Member of ING Germany, and Oliver Behrens, President of Frankfurt Main Finance. The panel was moderated by Sarah Schmidtke, Executive Director of the Central German Banking Association.
The three panellists quickly agreed on one point: Change is necessary. As Eddy Henning emphasized at the outset, the tone is currently “minor.” Companies often report feeling “unready” and overwhelmed by bureaucracy. Henriette Peucker aligned with these concerns, acknowledging the critical role of Germany’s capital market, stating: “No amount of state money can drive transformation”. However, she still highlighted significant weaknesses and untapped potential.
“For politicians and large parts of the population, the capital market is considered the work of the devil,” Oliver Behrens agreed with the arguments of his fellow panellists. He emphasized the importance of “having a clear plan,” which is still missing in too many areas. There was also broad agreement that excessive regulation remains an obstacle. While regulation is “good and necessary,” as Henning noted, particularly in light of the 2008 financial crisis, he pointed out that when it comes to reporting obligations, one must ask: “At what point do we start overdoing it?” Reporting, regulation, and bureaucracy – these factors make Germany’s capital market overly complex.
Behrens emphasized that the political sphere must take responsibility. Frankfurt, in particular, has become too complacent with its position as the leading financial centre in continental Europe. There is a lack of effective location marketing. Simply hoping that institutions and companies will settle here on their own is “naive,” he concluded. On a positive note, all three panellists praised Mike Josef, the new Mayor of Frankfurt (SPD), for his efforts to make the city more attractive. Henning pointed out that even small steps, like the property owners’ initiative in the Bahnhofsviertel district, are contributing to this effort. However, a broader cultural shift is needed to refocus on valuing young talent.
Avoiding becoming the “Biggest Back Office in Europe”
Without action, Frankfurt risks becoming the “biggest back office in Europe,” added Behrens. Effective city marketing is also essential here. In the past, it has too often been said: “Great idea, but why don’t you get started?” Even though politicians, even in faraway Berlin, are beginning to take the issue more seriously, there is still a lack of coordination between initiatives. For example, in Bavaria, university spin-offs are actively supported, according to Behrens. Frankfurt could repurpose vacant office spaces for startups and, of course, provide the best access to capital. In the second and third round of funding, startups often struggle to secure necessary capital. Research shows that the exchange of implicit knowledge and personal interaction are key factors in successful startup ecosystems. Frankfurt, as a city known for its short distances, could utilise this advantage. The Financial Times had already recognized this in 2022, calling Frankfurt “The perfect 15-minute city.”
When asked about their top three wishes for the new federal government regarding the transformation, Oliver Behrens made it clear: “The top priority is competitiveness.” This applies at the regional, national, and international levels. Behrens expressed a desire for more pragmatism in politics and the establishment of a capital-funded pension system to reduce dependence on foreign capital. With these steps, Germany’s financial hub could better fulfil its role in the world’s fourth-largest economy and play a central part in driving the transformation forward.