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finance industry

CFS Index shows upward trend – Finance industry revenues developing positively

The CFS Index, which measures the condition of the German financial sector on a quarterly basis, rises by 1.6 points to 110.3 points in the second quarter of 2016. The increase is based on the strong development on revenues in the finance industry. Contrary to expectations, however, the earnings performance of the financial institutions remains on a downward trend, while the service providers remain on a steadily positive trend. The investment volume of the finance industry is stable and almost unchanged. The financial institutions are anticipating job cuts in the current quarter; up to now the number of employees has remained stable at a neutral level.

“The survey results prove that a number of financial service providers are in a period of reorganisation, because the pressure on earnings in the industry continues to rise,” Professor Jan Pieter Krahnen, Director of the Center for Financial Studies, comments the results.

Finance industry sees the future international importance of the Financial Centre Germany at a historic high

The future international importance of the Financial Centre Germany reaches a historic high of 136.8 points. Owing to Britain’s potential exit from the EU, the corresponding value rises by 20.7 points.

Dr. Lutz Raettig, Executive Chairman of Frankfurt Main Finance e.V., emphasized, “We all deeply regret the results of the referendum, but naturally, we also respect the outcome. As a consequence, financial centres within the EU will now compete with one another to lure individual product areas and activities out of London. Frankfurt Rhine-Main will certainly be at the centre of this competition, but in a constructive and cooperative manner.

Business volume of the finance industry develops positively – contrast between earnings performance of financial institutions and service providers

The surveyed financial institutions and service providers manage to considerably increase their revenues/business volume again following the poor performance in the first quarter. The corresponding sub-index for the financial institutions rises by 2.7 points to 107.2 points in the second quarter. The service providers raise their revenues by 3.8 points to 120.3 points, which is only slightly below the prior-year level. The finance industry expects to maintain these levels in the current quarter.

In terms of earnings, the financial institutions record a further decline, contrary to their expectations. The corresponding sub-index falls to 96.9 points. However, the service providers reveal steady earnings growth, in spite of negative prior expectations. The earnings sub-index for this group rises by 0.3 points to 113.1 points. The financial institutions expect the low level to persist; the service providers are more optimistic for the current quarter.

The investment volume in product and process innovations of both groups remains at a solid level. The sub-index of the financial institutions falls by 0.2 points to 112.3 points. The service providers’ sub-index falls by 0.1 points to 112.6 points. As such, both groups are at the same level and neither is expecting changes in the current quarter.

Financial institutions anticipating job cuts in third quarter

As for employee numbers, which the financial institutions have so far kept stable at a neutral level of 99.7 points (+0.7 points), a significant decline is expected in the current quarter. The surveyed service providers are maintaining a higher level, with a value of 105.1 points, though they have hired significantly fewer new employees than in the previous quarter. The corresponding sub-index falls by 5.9 points. The service providers are optimistic that this value will improve in the third quarter.

 

ARD’s Plusminus on the current Brexit Debate

Currently, one of the most discussed topics is the UK referendum regarding a possible exit from the European Union. On the most recent episode of ARD’s business programme Plusminus, the segment “Goodbye Great Britain? – Where the Germans profit from a Brexit” explored the possible effects of a Brexit for the Financial Centre Frankfurt.

“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”, explained Hubertus Väth, Managing Director of Frankfurt Main Finance during the broadcast.

The broadcast continued to illuminate certain criteria which already make the Financial Centre Frankfurt an optimal location. Taking in the imposing tower of the European Central Bank headquarters, it is clear that Frankfurt is not just Germany’s most important Financial Centre, but also one of Europe’s. Several other institutions with their headquarters in Frankfurt, like the European Insurance and Occupational Pensions Authority and the European Systemic Risk Board, also lend to the Mainmetropolis’s clout as a Financial Centre. The financial decisions made in Frankfurt resonate across the continent.

In addition to its institutional prominence, Frankfurt’s superior infrastructure offers a competitive advantage not enjoyed by all other cities. Frankfurt boasts dependable, fully integrated exchange trading systems and is the technological leader in payment transactions. Furthermore, Frankfurt is considered the world’s largest data exchange point, with peak rates of 5.1 Terabytes per second. This is essential for practitioners in the financial sector who require lightning fast and reliable connections for data transfers and transactions.

The Main Metropolis offers additional decisive advantages, like the availability of affordable office space, a deep field of service providers, top academic institutions and one of Europe’s best-connected transportation networks. Short and sweet – Frankfurt is ready to roll.

View a video of the report and read the attached article here.

 

Financial Centre Focus: the largest banks in Frankfurt

In their new study, Helaba ranks the Financial Centre Frankfurt’s largest banks by employee strength for the first time. This new, survey-based ranking comprises the twelve largest banks and three major financial institutions. “Together, these players together make up more than three quarters of local bank employment – a broad basis for our employment forecast,” explains Dr. Gertrud R. Traud, chief economist at Helaba.

The consolidation-related staff cuts in the Frankfurt are expected to remain manageable. “A major reason for this development is the increasing need in the financial services sector as a result of new, more stringent regulatory requirements,” said Traud. First off, commercial banks require staff for the implementation of the new regulatory requirements. Secondly, by the end of next year, approximately 1,000 people are likely needed to build up the Single Supervisory Mechanism under the umbrella of the European Central Bank. “Through the acquisition of European bank supervision in Frankfurt, the financial centre will again be reaffirmed as the centre of European monetary and banking policy,” says Traud.

By the end of 2015, Helaba experts expect a total of about 61,300 bank employees in the Main Metropolis. Based on the latest available information in accordance with the new zoning for the Frankfurt area labour bureau (Q1 2013: 62,250), prediction means about 1,000 fewer jobs, a 1.5 percent reduction. The crisis induced personnel adjustments since the end of 2008 amount to a loss of 3,500 jobs. Considering this, the decline in employment in Frankfurt is lower compared to other financial centres.

Download the study

Peking

Long-time cooperation between Hesse and Beijing

The friendly relations between Frankfurt and China go back to the eighties. The partnership with Guangzhou, the capital of Guangdong province, was established as early as 1988.

In order to strengthen the economic ties between the cities of Frankfurt and Beijing, the Frankfurt Economic Development Company and the Beijing Investment Promotion Bureau signed a memorandum over friendly cooperation in August 2007.

Since then, the dynamic economic development in China, and especially in Beijing as the centre of the financial industry, has rapidly accelerated. In the third quarter of 2012, over 1,000 financial institutions and over 400 supervisory and regulatory bodies were headquartered in the Beijing Financial Street. Around 174,000 employees work there today for various kinds of financial service providers, which amounts to 70 percent of all employees in the finance sector throughout Beijing. The volume of financial assets totalled 62.1 trillion yuan RMB, accounting for almost 50 percent of the national total.

Accordingly, it was only logical for the financial hub Frankfurt to sign an agreement with Beijing in 2012 about long-term cooperation between the two financial centres. The arrangement centres on issues of financial market regulation and risk management as well as the education and training of managers and executives. The financial location Frankfurt is thus further expanding its excellent capabilities and contacts in these areas.

With its Xicheng District, Beijing is one of the most dynamic financial centres in the world. The collaboration is a valuable asset to the global network of the financial centre Frankfurt. Xicheng offers great business potential, which is to be developed for the financial industry in Hesse by the joint initiatives of the Hesse state government, the representatives of the economic community in Hesse and the financial centre Frankfurt.

The financial centre agreement is rounded off by an agreement to stage a Hessian-Chinese Economic and Trading Day in Frankfurt. The possibility of setting up a Chinese-Hessian business advisory board is being explored.