London banks eye German financial center as Brexit gets underway

Dima Suchin
By Dima Suchin
March 29, 2017World News

Germany’s financial center Frankfurt is attracting interest as London banks consider operations in the EU in anticipation of Brexit.

Spokesman for Frankfurt Main Finance, Ralf Witzler, said he has already noticed a significant leap in enquiries from people higher up the decision making chain. He expects some concrete indications from banks around the end of March.

The flurry of activity comes after UK Prime Minister Theresa May said Britain would leave the EU’s single market.

This would isolate companies in the city of London from many of its clients.

Germany’s economic strength and the fact that Frankfurt is home to the European Central Bank (ECB) makes it attractive for banks.

“Frankfurt has a lot to offer. For one, you have the closeness to the regulators, to ECB, to Bafin—both institutes that work very pragmatically. On top of that Frankfurt is the closest to London, ie it has the most similarities to London in its setup and structure. This would make it an easy transition for the banks,” Witzler told Reuters TV outside the city’s landmark stock exchange.

Frankfurt Main Finance, a group backed by local government to promote the city, has predicted that 10,000 jobs will move from London to Frankfurt over five years, with investment banks among the early movers.

Germany’s top regulators have already met about 50 envoys from foreign banks to explain how they could move business to Europe’s biggest economy after Britain leaves the European Union, German financial watchdog Bafin said.

Many Germans are skeptical about the practices of largely U.S. and British investment banks, that often run their international operations from London. This view was reinforced when Deutsche Bank—a German bank on Wall Street—had to pay US$7.2 billion in penalties for selling toxic mortgage securities before the 2008 financial crisis.

There are some hurdles. There is a shortage of housing, while the region’s 13 international schools are already well subscribed. Nightlife in the city—where many bars are largely empty for much of the week—is also seen as a turnoff.

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