Frankfurt Main Finance authentically combines the business and social aspects of the region and financial centre
Over the past decades, Frankfurt am Main has increasingly developed into the most important financial centre in mainland Europe. This was by no means self-evident. Looking back over the same time period, Munich, Stuttgart and Düsseldorf had also their sights set on this role. However, the concentration of financial institutions and European consolidation have led to the finance providers now forming clusters on the River Main. The current developments surrounding Britain’s exit from the European Union will reinforce this development.
The initiative launched in 2008 by the Frankfurt-based banks and the policymakers in the City and region to create an independent mouthpiece for this key sector was all the more significant against this background. It was not intended as competition to the boards of the Chamber of Industry and Commerce or the banking association, but rather to establish an independent position for the people representing the so-called financial sector in a broader sense. This was not only in the interests of the policy-makers, who were seeking a neutral platform of dialogue, but also of the economic sector, which was striving to win over the policy-makers to a common future development through a unified representation overarching the individual positions of different financial institutions and their associations.
However, with its foundation also came the awareness that the initiative would be an organisation which could talk convincingly to other financial industry players outside Frankfurt and Germany about the pros and cons of the Frankfurt location. Over the years, the importance of this role has grown as well.
The Frankfurt stakeholders long ago abandoned the illusion of being able to challenge London’s pole position in Europe in terms of the number of jobs and international significance. The difference in size is just too great. However, on the European continent, Frankfurt am Main can easily outrival the competition. One reason is the presence of such important regulators as the European Central Bank (ECB), the Bundesbank and major divisions of Germany’s financial regulatory authority. Another is the internationality of the banks, and also of the City as a result of the airport. However, the comparison with the “City of London Corporation”, the representative body of the London financial centre, clearly still remains a legitimate incentive even today.
“At no time in history have more executives and employees of international banks been looking at the same time for a location in Europe as at present. Almost all of these searches end with a clear advantage for Frankfurt.”
For all the people in the companies that have agreed to participate in the Frankfurt initiative, this means additional work. We not only owe it to the president, Dr. Lutz Raettig, and the managing director, Hubertus Väth, who shaped the past decade of the initiative, but also to the many associates in Frankfurt’s society and politics, that Frankfurt Main Finance is today a highly respected and sought-after contact.
At no time in history have more executives and employees of international banks been looking for a location at the same time in Europe as at present. Almost all of these searches end with a clear advantage for Frankfurt. Nevertheless, many people – often too many – are sceptical that the quality of life, infrastructure, training opportunities and banking regulation are really good enough for Frankfurt to win the race. However, it is not all just about facts and figures. Very often it’s people’s life philosophy and experience that count. Frankfurt Main Finance has the extraordinary opportunity of being able to credibly combine the economic and social aspects of the Frankfurt region and financial centre in all presentations.
Now, after a decade, we can safely say that the foundation of such a representative organ for the financial industry in Frankfurt was right and important. We can certainly also say after ten years that the sustainability of the initiative founded at that time has been proven. On this sound foundation, it now is entering the next decade. And this decade too will be marked by challenges posed by national legislation, regional activities and the industry itself.
“Now, after a decade, we can safely say that the foundation of such a representative organ for the financial industry in Frankfurt was right and important. We can certainly also say after ten years that the sustainability of initiative founded at that time has been proven.”
Germany is still in a situation where the earnings of banks clearly lag behind those in other European countries. This will lead to cost savings, staff reductions and site closures. For the financial centre, with all the global and regional headquarters, this can certainly prove to be a boost. But it will change the demands made on the employees, the salary levels and the service providers located at the domicile of the companies. Without Brexit, a reduction in the number of employees employed in Frankfurt was to be expected, but this could now turn out completely differently.
Regardless of whether there will be more or differently trained employees, their demands on the region will change. Internationality will increase, therefore more international schools will be needed. University education in the region must adapt to the changed remit, particularly in the area of risk management and general bank controlling. The City’s cultural offer also needs to compete with other European metropolises by staging special events to boost the popularity of the region alongside the already existing superb facilities. The financial centre initiative can make a very important contribution by accurately describing the demands that will be made on the region.
From the very beginning, it was not to be underestimated that the initiative’s specific hallmark includes being recognised by savings banks, cooperative banks and private banks alike. As a result, it has also become an initiative that in terms of national legislation can speak on behalf of the whole financial sector beyond the sectoral interests. This contribution is also highly appreciated by the policy-makers in Berlin and Wiesbaden, and there is still room for expansion.
At present, we are dealing with a completely over-regulated industry, which, together with the legislator, is still struggling with the consequences of the last financial crisis. In international competition, good and secure regulation is just as important as the sector’s ability to flexibly change its business models without unnecessarily bureaucratic hurdles and adapt them to the ever-increasing rapidity of the innovation cycle. The current discussion surrounding the amendment of labour legislation to allow a more flexible deployment of by far above-average earners in investment banking could be a touchstone for this.
At the latest since the beginning of this decade, the financial industry has – understandably – no longer been popular. For Frankfurt, however, it is the most decisive vehicle, along with the airport, for prosperity and growth. At the same time, Frankfurt is home to an industry that will inevitably change in pace with rapid technical innovations. And Frankfurt will also be a good place to work for young people, who will shape their world of the future from here. It would be good if the City, the regional policy-makers and the citizens could look upon these companies and their employees with confidence and some pride.
Business and politics need the support of the citizens to create attractive conditions for the financial centre. Frankfurt Main Finance is an important facilitator between all the stakeholders and institutions. The initiative has proven this over the past decade, and this is precisely what will also be expected of it in the future.