FRANKFURT CALLING Germany Hosts Summit for London Banks

The financial regulator BaFin has invited international banks to a summit to discuss moving their operations from London to Frankfurt in the wake of Brexit. Dozens of executives have already signed up.

Germany is rolling out the red carpet for London banks in search of a new European home in the wake of Britain’s decision to leave the European Union.

The interest expressed in Frankfurt has been so great that Germany’s financial regulator, BaFin, will host an information summit for London banks, Handelsblatt has confirmed.

The news agency Reuters originally broke the story, citing unnamed sources.

The meeting is being organized by the Association of Foreign Banks in Germany, according to Handelsblatt sources in the financial industry. The association represents more than 200 foreign financial institutions that do business in Europe's largest economy.

We anticipate that large investment banks will make their decisions about moving by the end of the first quarter. Hubertus Väth, Frankfurt Main Finance

So far, 40 executives from 25 investment banks have signed up to attend the meeting, sources said, including industry giants such as Goldman Sachs and Morgan Stanley. Most of the banks that have agreed to attend already have a presence in Germany.

Through the meeting, BaFin aims to inform banks considering a move to Frankfurt about the risk management, capital, liquidity and other regulatory requirements they must fulfill to obtain a license.

Financial institutions are considering shifting operations to the continent because senior E.U. officials have indicated that banks will not be allowed to conduct euro-denominated trades from London.

Goldman Sachs, for example, is considering the transfer of up to 1,000 personnel from London to Frankfurt, according to Handelsblatt sources. The New York investment bank is setting up a new subsidiary in Frankfurt, Europe SE, that will bring its European operations under one roof.

Frankfurt is considered a convenient location because the city is already home to the European Central Bank, Germany’s influential Bundesbank and the Frankfurt stock exchange. Financial institutions are also looking at Paris and Dublin as possible alternatives to London.

Frankfurt Main Finance, an association of public and private actors that promotes Frankfurt as a financial center, estimates the city could receive up 10,000 jobs from London.

“We anticipate that large investment banks will make their decisions about moving by the end of the first quarter,” said Hubertus Väth, the managing director of Frankfurt Main Finance. “The commercial banks will make their decisions in a second wave.”

But not everyone in Germany is convinced that Frankfurt will clean up from Brexit. The chief financial officer of Deutsche Bank, Germany’s largest financial institution, believes London will remain the leading financial power in Europe for the foreseeable future.

“It’s a little naïve to think that some other European city can replace London as a financial center,” Marcus Schenck said in an interview with the Sunday edition of German newspaper Die Welt. “The City is a microcosm that has been built up over 30 years. It’s not so easy to copy it.”

 

Yasmin Osman is a financial editor for Handelsblatt based in Frankfurt. To contact the author: [email protected]