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Euro-Clearing after Brexit – Hubertus Väth in BBC Radio 4 Interview

The Economic and Monetary Affairs Committee of the European Parliament just released a statement on the future regulation of Central Counter Parties (CCP). The euro clearing by CCPs is an important part of the financial architecture of the European Union following Brexit. At the moment, the majority of transactions is handled by a London-based company. Currently, it is up for debate whether this will continue to be the case. In an interview with Dominic O’Connell on BBC Radio 4 Hubertus Väth, Managing Director of Frankfurt Main Finance, discusses the recent ECON statement, which is an indicator for how the EU might eventually decide.

While it is not certain what the consequences of Brexit will be for the financial centre London, it can be assumed that euro denominated interest swaps will be under heightened supervision by the European Securities and Markets Authority (ESMA) and the European Central Bank. Second to London Frankfurt is the most important centre for euro clearing and generally, having more than one euro clearing institution is of importance as it allows for more stability in times of a crisis. While a relocation might have some economic impact, research conducted by asset managers found that a relocation promises to be beneficial to pensions.

Listen to the full interview!

Hubertus Väth: Why I’m sticking with the “10,000”

As an economist, you calculate a lot of numbers in your life. As a communicator, you learn to value them as carriers of messages. But none of “my” earlier numbers have stirred minds and the media as much as my forecast for the “morning after”. 10,000 – calculated weeks previously for the worst-case scenario, published for all the world to see the day after the Brexit referendum, this number has been roaming around the media landscape ever since.

It could mean 10,000 jobs ending up in Frankfurt, if… (followed by a whole host of conditions). London’s City could lose as many as 20,000 to 25,000 jobs. Not a lot really, considering that the London financial centre employs 700,000 people, but a big deal for Frankfurt.

The number was a message: a great deal for Frankfurt, not so much for London. It was a broad definition, including as it did all support industries. And the number also had conditions attached: Brexit is coming, passporting is going, the EBA is coming and euro clearing won’t stay in London, the relocation will last for more than five years and – it’s gross, i.e. doesn’t make allowance for any job losses in Frankfurt.

So you can see: all of the key areas of discussion to date had already been highlighted on the “morning after”. But the spotlight was on it alone, the One. The Number. Such complex material, so nicely rounded.

Since then, it has appeared in around 90 countries. You hear it, see it, read it. Journalists from all over the world made the pilgrimage to this beautiful city on the river Main, full of self-doubt, but ready to be convinced. By now I’ve talked to more than 800 of them.

Frankfurt as the big Brexit winner? The doubters were not hard to find. There are no schools, no offices, no apartments. There was even carping about the food and beer, not to mention the quality of the locally available coffee, and a damning indictment of the cultural landscape. The image was frightful, according to harmonious souls in Munich, Dusseldorf, Cologne, Hamburg and Berlin, and the City and its competitors for London jobs in Paris, Dublin and elsewhere cited them with relish.

It will be 2,000 to 3,000 jobs at most, it was said, quietly and in confidence. A forecast that has since been increased several times in the same place. The Frankfurt School of Finance & Management saw 20,000 bankers on their way across the Channel. By contrast, supposedly sober-minded people held any forecast at all to be frivolous (the who’s who of the consultant scene however did exactly that in London: forecast. But in Frankfurt we were serious, oh yes!) But around 15 months later, the same source felt able to report about 5,000 jobs net. In other words, there were now forecasts of an influx from London and job losses in Frankfurt at the same time. Despite every effort to do so, we cannot figure out the two components of this number to this day.

Helaba leaped to our defence early. The always well-received, annual, and in contrast to us as a lobbying association (more disparaging would hardly be possible), always considered respectable study on the situation in the financial centre came up with 7,000 London jobs in 2016, before going on to see a lower limit of 8,000 a year later in 2017.

No sooner were the first names of the financial institutions coming out in favour of the location known, and scarcely had it been made public by the board that in the worst-case scenario up to 4,000 jobs are under scrutiny at Deutsche Bank in London, than the calls came for us to increase the number. The decision to relocate the EBA in favour of Paris had barely been reached, and many people already wrongly believed Frankfurt to be playing a losing game.

No, we stuck with and are sticking with the 10,000. Are we not capable of learning? Yes, we are, but if you think ahead, you don’t have to up the ante: to this day, we still don’t know exactly what Brexit will look like. Although many things are a lot clearer than a few months ago: Brexit will come. That can be considered very certain. A transitional period of 21 months has been agreed. The five-year period in which the 10,000 jobs we forecast would relocate to Frankfurt has proven to be far-sighted, as has the thesis that euro clearing would become an issue and will be decisive in terms of the outcome.

So yes, we are undeterred, because 21 months after the referendum, our scenario is still intact. The transitional period cannot be prolonged. The exit from Brexit that some believe they can see will turn out to be a mirage. Only the EBA didn’t come, giving us the perfect excuse if the number doesn’t quite reach 10,000.

And one more thing: you can take advantage of opportunities, or you can fail to do so. 10,000 is absolutely possible for the Financial Centre Frankfurt. If we don’t reach it, the question must be: why did they not come? We think it’s better to now ask the question: what else do we have to do to reach it? Plenty! The 10,000 is still feasible. Because many people have very quietly done a great deal of good. If you consider the use of the (modest) funds with which everything so far has been achieved, the result is sensational. Simply Frankfurt.

This guest contribution was first published in the daily newsletter at Finanz-Szene.de.

CEo Theodor Weimer

Theodor Weimer: Why we are championing Frankfurt

Deutsche Börse is championing Frankfurt – and this supports the city as a financial centre. And it also helps Deutsche Börse. Because these initiatives enable us to also strengthen ourselves as a listed company on the global competitive stage. However, this works the other way around too. Frankfurt as a financial centre relies on Deutsche Börse’s strength to enable it to seize the opportunities currently available on the European financial market.

One example is euro clearing. With the forthcoming Brexit, the most important and, in terms of volume, predominant clearing house for interest rate swaps to-date would lie outside the EU. However, the EU will need to be strong enough to keep the systems so vital to its provision of financial instruments under its own jurisdiction without the British and without London.

Sounds complicated? Let me put it more simply: having just a single central clearing house for euro interest rate swaps is neither good nor is it in line with market requirements. Having a single such central clearing house – that is outside the EU, is just not on. Deutsche Börse has been very successful thus far with its offering to clearing customers. Customers see this matter the same way that we as the central financial service provider see it. We are ready, and in my opinion, the euro products clearing business should come to Frankfurt. Both the city and Deutsche Börse stand to profit. We should regard the decision to relocate the European Banking Authority (EBA) to Paris as a warning sign. We must all make an effort now; and I am sure that we will make an effort.

Our offer for the euro clearing operations, which nearly all major banks and financial service providers have meanwhile subscribed to, benefits us and simultaneously strengthens Frankfurt as a financial centre. By establishing a competitive, extremely efficient second trading point, we are promoting both the transparency and the robustness of the international financial markets. The volumes concerned are vast; our partnership programme achieved an average daily volume of €35 billion in the off-exchange interest rate segment in January 2018. Strengthening Frankfurt strengthens efficient and secure markets – and this is Deutsche Börse’s aim.

Frankfurt needs Deutsche Börse as a strong partner in order to be able to seize opportunities. A second example: regulation. We have positioned ourselves much more broadly here too and developed offers that efficiently implement regulation.

Regulation is, in a sense, a double-edged sword, as it is designed to create security without stifling motivation or creativity. I personally believe that regulation in the last ten years since the financial crisis has done a great deal to make our markets more secure and our banks more robust. I say this as CEO of Deutsche Börse, but also as someone who still remembers very well some nine years I spent as head of a major bank. I know banks, and I know the stock exchange – better and better. While regulation and its unintended consequences should be subject to regular review, regulation itself is a success.

It is important to me to expressly state that. This is the viewpoint that we, as Deutsche Börse, submit to the debate. At the same time, we offer solutions that facilitate implementation of regulations for our customers and that help to accurately process reporting requirements. This position means we enjoy technological leadership and set the pace for the entire sector as well. This competitive advantage will enable us to hold our own at the top with new initiatives.

Frankfurt is, therefore, a regulatory centre; important institutions are based here – first and foremost, the European Central Bank and the Deutsche Bundesbank, with a BaFin representative office as well. Then we have the most important and largest German banks, and what I consider a definite advantage to Frankfurt – many international banks. And not forgetting us – Deutsche Börse. We are reinforcing our company with offerings that turn the tomes of rules and accompanying manuals into efficiently functioning systems. There is also a need for this. Three very important regulations have gone into effect this year: MiFID II, the Benchmarks Regulation, and the European Central Securities Depositories Regulation (CSDR). The MiFID II text alone numbers 25,000 pages.

Frankfurt needs Deutsche Börse in order to be able to seize opportunities. Example number three: IPOs. In this regard, we face a good, possibly an excellent year. This is good for the real economy, good for Frankfurt as a financial centre, and good for Deutsche Börse.

We want this trend to continue and we are doing what we can to also make Frankfurt an attractive location for IPOs. Our various initiatives that support companies long before their IPOs are part of that. With our offering of location, funding, and business environment, we address the start-ups and creative individuals that we so urgently need in Germany. Frankfurt has caught up considerably here but we need to become better still. Our Scale segment and the Venture Network will help Frankfurt to become considerably more visible across Europe in this regard.

We are now investing a lot of money in a major renovation of the stock exchange building in Frankfurt city centre – with a focus on three aspects of improvement.

Firstly, a visitor’s centre, intended to bring especially young people closer to stock exchange activity and financial market functions. It is particularly important to me that the next generation knows and understands what our sector is all about. The stock exchange up close. This knowledge, referred to as “financial literacy”, makes many things a lot easier – from personal retirement savings to a broad public discussion about economic relationships. I believe that this century will be marked by these issues.

Centre for IPOs

Secondly, we are building a conference centre that we will also offer for use to others. The stock exchange is an ideal forum for debates and disputes. The architecture of our stock exchange building in Frankfurt actually invokes the agora of ancient Greece, the marketplace. A conference centre in a stock exchange is therefore not a strange thing that we made up. It belongs there.

Thirdly, we are constructing a new centre for IPOs. We can and want to do more for our customers in this regard and we are, of course, doing it wherever possible starting now. As part of the expansion, we are creating an appropriate physical space as well. IPOs serve first and foremost to raise capital. But they also always have a communicative function. They attract more attention – and that applies especially to SMEs. Attention to the right message — that applies to all companies, even large ones. This is because an IPO is pretty much a one-time chance for companies to make themselves known to a broader public. They will be even more successful if they use our new IPO centre – at least that is our plan. We want “Listed in Frankfurt” to become a seal of quality.

The renovation of the stock exchange – in the building owned by the Chamber of Commerce and Industry, with whom we have a long-term lease – strengthens Frankfurt as a financial centre and thus also Germany as a business location. Our sector needs Deutsche Börse to be strong, to be able to make good offers for raising capital. And one that promotes a vibrant system of young and small companies that (hopefully) demonstrate how we want to achieve prosperity in 20 or 30 years.

So, why is Deutsche Börse strengthening Frankfurt as a financial location? Because we need a strong European financial centre that can efficiently perform vital functions for our sector, such as euro clearing. Because Frankfurt is the centre of clever regulation with a sense of proportion, and because regulators and our customers have an interest in market-oriented implementation of those rules. And because Frankfurt is Germany’s most important stock exchange location and therefore the leading stock exchange of the largest European economy.

After Brexit, Frankfurt will become more important in all these aspects. Let’s all work together so that Frankfurt can utilise its strengths.

By Theodor Weimer. The article was first published in the Börsen-Zeitung, “Finanzplatz Frankfurt” supplement

Financial Centre Frankfurt

Consistent interest in Financial Centre Germany from Brexit banks

  • Germany is an attractive location for the international financial industry
  • The new federal government can, however, increase its attractiveness even further
  • Internationally agreed and harmonised regulatory frameworks guarantee international financial stability

“We see an unbroken interest in the German financial centre among banks that are considering relocations due to Brexit. Supervisors and politics have already done a lot over the past 18 months and are well positioned, but we must continue to work,” says Stefan Winter, Chairman of the Board of the Association of Foreign Banks in Germany (VAB) at today’s press conference. Among other things, there is a need for action to limit severance payments to high earners in the banking sector and to internationalise the law. For example, German law is often not agreed upon internationally in framework agreements, because German courts also examine these in commercial transactions as well as all general terms and conditions for consumers. “As a result of the Brexit, we expect about 20 banks to expand their presence here. This will involve up to 5,000 new jobs in the next two to three years, many of which will be hired locally. Much will of course depend on whether there will be transitional periods. In fact, everyone agrees that there must be transitional arrangements. But no one can say for sure today whether there will be any. Our members are therefore still planning to have fully operational units in Germany on 29 March 2019 so that they can continue to provide financial services for their customers,” Winter emphasises.

Silvia Schmitten-Walgenbach and Guido Zoeller, the two vice-chairmen, emphasise the stable number of employees in the member institutions, which are also attributable to the good framework conditions and the still prosperous German economy. In addition to the economically stable situation, the foreign financial industry has also benefited greatly in recent years from international harmonisation, which is also an advantage for international supervision. The ECB has taken on an important role in this respect and further developed a level-playing field in the euro zone. Schmitten-Walgenbach adds: “In the interest of international financial stability, national recentering and a softening of internationally harmonised financial market regulation should therefore be avoided.”

As the financial centre becomes more international, Zoeller points out the impact on the work of the Association: “We will provide even more information in English and set up English-speaking working groups.” As the international importance of the financial centre grows in the next few years and institutions increasingly choose the place as a starting point for their financial services in other EU states, the association must also address new issues. “So far, we have tended to have an inbound view, but this will change. We will be prepared for this and we are looking forward to it,” summarizes Winter.

The complete speech can be found in the internet at www.vab.de.

Costs of relocating Euro Clearing significantly lower than expected

  • Up to thirty-percent savings for asset managers if Euro Clearing moves to EU27
  • 100 billion USD costs estimated by London Stock Exchange found far too high
  • Maximum costs over five years to be around EUR 3.2 billion

Frankfurt am Main – The discussion on the effects of Brexit on Euro Clearing and its supervision continues to concern experts, practitioners and politicians. A working paper from Frankfurt based asset manager, Union Investment, indicates that relocating Euro Clearing to an EU27 financial centre would result in significant cost savings for asset managers. These savings should be realised in initial margin costs and clearing broker fees which currently account for approximately seventy-percent of the total clearing costs for asset managers. The paper explains that in the long term, the up to thirty-percent savings would compensate for any temporary additional costs caused by a wider bid-offer spread.

Another working paper by the Center for Financial Studies (CFS), an independent non-profit research institute at Frankfurt’s Goethe University, contests London Stock Exchange’s (LSE) estimate and other similar studies. According to the paper’s author and CFS Managing Director, Professor Dr. Volker Brühl, “Due to the fragmentation of the market there may be a temporary increase in costs. However, the costs of up to USD  100bn cited by LSE are not verifiable and are far too high. Basing an estimate on more realistic assumptions, the maximum costs over a period of five years are likely to be around EUR 3.2bn. This is before even accounting for the potential savings that asset management companies could make as a result of the relocation.”

Central counterparties (CCPs) and clearing houses are systemically relevant and critical components for maintaining global financial stability. Any crisis situation would likely require an injection of euro liquidity from the ECB and thus, these CCPs deserve to fall under ECB supervision. “The primary goal of any discussion on Euro Clearing must be protecting stability in European financial markets,” explains Hubertus Väth, Managing Director of Frankfurt Main Finance. “The exaggerated estimates stemming from London are neither constructive nor prudent. While decisions on Euro Clearing should not be made purely on a cost basis, the findings of CFS and Union Investment are reassuring. Should clearing relocate, the Financial Centre Frankfurt would be a competent alternative to London, especially with Deutsche Börse’s Eurex Clear.”

Currently, ninety-percent of euro-denominated OTC derivatives are cleared in London. Following Brexit, the calls to relocate Euro Clearing to a European financial centre under the ECB’s supervision, like Frankfurt, were reborn. In response, estimates from the London Stock Exchange pointed to a cost increase of more than 100 billion USD if clearing were to leave London.

The study from the Center for Financial Studies can be downloaded here.

The study from Union Investment can be downloaded here.

 

Deutsches Aktieninstitut presents its second Brexit position paper and claims: Transitional arrangements now!

The Deutsches Aktieninstitut (DAI) presents its second position paper. The paper on the exit negotiations between the European Union and the United Kingdom complements the first position paper from February 2017 and covers further relevant topics, e.g. clearing, benchmark and rating. In the light of proceeding negotiations, the position paper claims to find transitional arrangements that prevent Europe from a Cliff Edge Scenario.

Under the slogan “Exit negotiations between the European Union and the United Kingdom: Minimise Brexit risks and strengthen the European capital market”, the analyses of financial and capital market legislation and concrete examples from practice, illustrate which topics deserve particular attention due to their significance for business and society in connection with the Brexit negotiations.

No deal is the worst deal for all parties affected

“The United Kingdom’s departure from the European Union will have considerable consequences for the European economy and society”, Dr. Christine Bortenschläger, Chief Executive of DAI mentions in the paper, “It is not yet possible to predict how those will look like in detail since the outcome of the ongoing negotiations between the United Kingdom and the European Union is still completely open. This means that companies are losing valuable time they need to adjust to the new situation.”

Risk and consequences of a hard Brexit can be reduced with transitional arrangements

The third country regimes in financial -and capital markets law won’t serve as a sufficient basis to regulate the relations between the 27 EU-states and the United Kingdom, as the second position paper shows. Therefore, the European Union needs a new and broad trading agreement that complements first transitional arrangements. “Transitional arrangements are of decisive importance to buy more negotiating time, enable businesses to prepare for the new situation, and avert a no-deal scenario”, is one of the first position paper sentences.

Brexit

German trade associations publish Brexit Compendium

Renowned German trade associations today have published a digital, cross sectoral Brexit Compendium, with the aim of bundling the interests of the German economy. The position papers of participating trade associations on Brexit can be found on the respective website http://brexit-kompendium.de/en/, sorted by relevant topics.

The United Kingdom’s departure from the European Union will have far-reaching consequences on the European economy and society. In this regard, the concrete impact depends on the result of the Brexit negotiations.

The objective of the Brexit Compendium is to aggregate topic areas with high relevance for the economy in a reference work. To do so, the position papers of the participating trade associations have been pooled in one location. That way, political decision-makers and the interested public are provided with an easy access to problem analyses and solution proposals.

The trade associations contribute their specific topics and expertise to the project. They are independent in terms of content and stay responsible for their topics and publications.

The website of the Brexit compendium can be found here.

Rational implementation of the central EBA award criteria supports relocation to Frankfurt

Frankfurt am Main – The European Commission published its assessment of the applications for the seat of the European Banking Authority (EBA). As a result of the United Kingdom’s withdrawal from the European Union (EU), the EBA must move its seat from London to an EU country. In addition to Frankfurt, seven other cities submitted applications for the EBA. Frankfurt Main Finance welcomes this commendably transparent application process. The EU Commission documents can be found here.

The financial center initiative Frankfurt Main Finance (FMF) believes there are substantial grounds for relocating the EBA in the Financial Centre Frankfurt. “When discussing settling EBA in London, two main arguments stood out. First, that London was one of the leading financial centres. Secondly, London could point to its regulatory competencies. These arguments hold for Frankfurt more than any other city within the EU. This is also confirmed by the majority of banks’ decisions to move to Frankfurt,” says Hubertus Väth, Managing Director of Frankfurt Main Finance.

“As the home of the European Central Bank (ECB), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Systemic Risk Board (ESRB), the Financial Centre Frankfurt is already the capital of European financial market supervision. Settling the EBA in a location other than Frankfurt would impose needless fragmentation on this unique ecosystem rather than strengthening it. As a direct consequence, this would also impose additional expenses on the banks, already suffering from the costs of Brexit,” Väth continued. “From our point of view, any rational implementation of the award criteria can only speak for relocating the EBA to Frankfurt.”

Contact Person for Media Inquiries:
Dr. Ralf Witzler
Frankfurt Main Finance e.V.
COLOSSEO
Walther-von-Cronberg-Platz 16
60594 Frankfurt am Main

Telephone 069 94 41 80 – 50
Telefax 069 94 41 80 90
ralf.witzler@fmfinance.de

Frankfurt Main Finance
Frankfurt Main Finance is the voice of the leading financial centre in Germany and the euro zone, Frankfurt am Main. The initiative has more than 40 members including the State of Hesse, the cities of Frankfurt and Eschborn, and dozens of prominent actors in the finance sector. Through their membership and engagement, they all demonstrate their close relationship to Frankfurt and desire to position Frankfurt amongst the top national and international financial centres. Frankfurt Main Finance leverages the influence of its members to advocate for the Financial Centre Frankfurt and provide high-caliber dialogue platforms. For more about Frankfurt Main Finance and its members, please visit www.frankfurt-main-finance.com.

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FMF welcomes appointment of Theo Waigel as special officer in the bid to relocate EBA to Frankfurt

Theo Waigel, former German federal finance minister, has assumed the position of special officer to handle the application submitted by the German federal government and the state government of Hesse in support of relocating the European Banking Authority (EBA) to Frankfurt. This was announced on Friday by Volker Bouffier, the prime minister of the State of Hesse. Currently domiciled in London, the EBA will have to be relocated to another member country of the European Union (EU) once the United Kingdom leaves the EU. Other EU countries alongside Germany would also like to secure the EBA. A decision on the authority’s future post-Brexit domicile is expected to be made in November 2017.

The financial centre initiative for Frankfurt am Main, Frankfurt Main Finance (FMF), expressly welcomes the appointment of Theo Waigel as special officer. “We are thrilled by this decision as it marks a clear commitment on the part of the German federal government. The attempts to base the EBA in Germany have received substantial support with this appointment. The former German federal finance minister possesses expertise, influence and diplomatic prowess. The decision to appoint Theo Waigel was a smart move,” says FMF managing director Hubertus Väth. “Theo Waigel enjoys great credibility and is passionately pro-European. He has close ties to Frankfurt not least of all thanks to his participation in the Frankfurt Finance Summit and a publication in the city’s year book. Together with Helmut Kohl, he was instrumental in launching the Euro.”

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).