Bank relocations to Frankfurt ‘to create thousands of new jobs’

How many businesses will Frankfurt attract in the next few years? Questions still remain as uncertainty over the future of London’s banking institutions continues as a result of Brexit negotiations.

Euro sign in the centre of Frankfurt
Frankfurt believes it will attract 10,000 financial sector staff from London over the next four years with the knock-on effect creating almost 90,000 new jobs in the region.

Frankfurt and Berlin among preferred locations post-Brexit

The German city has emerged – along with Dublin – as a favourite for banks seeking to establish a European hub in the event that, because of Brexit, London loses the ‘passporting rights’ that currently enable institutions based there to operate freely throughout Europe.A study by the WHU-Otto Beisheim management school for the lobby group Frankfurt Main Finance predicted that 10,000 financial services posts could relocate to Germany, in the process creating up to 87,667 new roles throughout the Rhein-Main-Region in sectors as diverse as real estate, the motor industry, tax collection, healthcare and technical services.Even based on a more “prudent” scenario, the report said the Brexit ripple effect would result in at least 35,913 jobs being created outside of financial services. Depending on the higher or lower scenario, the study suggested local tax revenues would increase between an annual 191–136 million euros.However, estimates vary widely as to just how many staff the banks will move from London, even if all passporting rights are lost at the conclusion of Brexit negotiations.Deutsche Bank notified staff in July that it was likely to book the “vast majority” of its assets out of Frankfurt – where the bank is headquartered – after the UK leaves the EU, and has suggested half of its 8,000-strong UK workforce could move to Germany.Morgan Stanley, Citigroup, UBS, Goldman Sachs and Standard Chartered have plans in hand to establish European hubs, or at least increase existing operations, in Frankfurt, along with four major Japanese banks. Yet most of these are talking of relocating staff in their hundreds, rather than thousands.
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Additionally, many of the planned moves are contingent on the outcome of the Brexit talks. Elvin Durakovic, a partner at estate agents Knight Frank in Frankfurt, told the BBC, “Last year, when Brexit was announced, I got calls: ‘Elvin, are you partying? Elvin, are you happy everyone is coming to Frankfurt?’. But, unfortunately, it is not really the fact,” he said.Mr Durakovic said that, although “10 or 11” companies with offices in the city had called to say they would be double-sizing, “the truth is people are coming, looking around, but not making decisions”, partly because of a reluctance by many companies and their staff to abandon London.

Uncertainty remains for businesses

“No one is aware of what will happen in one or two years, what will be the result of Brexit, what payments they will be forced to make if they stay in London. They feel very comfortable in London, but they have to be prepared,” he said.But Hubertus Vath, managing director of Frankfurt Main Finance, is confident London-based jobs will move to Germany in large numbers over the next four years.“The job growth will further advance the economic strength of Frankfurt and the region. A real success story for all parties involved,” he said. “Now, it is important to absorb and shape this growth positively. That is a challenge. However, the additional jobs also bring the funds to invest and master the challenge.”Oliver Schwebel, who heads Frankfurt Economic Development – a group charged with attracting business to the area – said the city had a lot going for it when it came to attracting staff to relocate, in addition to the fact that many of the banks already had existing branches there.He cited Frankfurt’s size as a medium-sized city rather than huge metropolis; a large, English-speaking population; its extensive air and rail connections; its family-friendly atmosphere; and its position in a time zone that allows for bankers to service Asian markets in the morning and the US in the evening.
Don't miss David Sapsted's coming article Brexit: The great relocation battle – which discusses the competition emerging for European agencies as they relocate from London post-Brexit – in the coming Autumn 2017 issue of Relocate Magazine
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