In the competition to attract bankers fleeing London due to Brexit it appears Frankfurt is beating out Paris, although experts say the race is far from run. "In the first wave of relocations Frankfurt clearly has been a step ahead of Paris, which hasn't had much to show," said Nicolas Veron, a fellow at the Brussels think tank Bruegel as well as the Peterson Institute for International Economics in Washington. Thousands of well-paid jobs are at stake as banks and other financial companies plan to move out of London some operations and staff that handle European business ahead of Britain exiting the EU in 2019. Several large international banks have already shown their interest in "Mainhattan", the nickname given for Frankfurt's financial district which is a stone throw from the river Main that flows through the city, home to the European Central Bank. Among them are US heavyweights Morgan Stanley, Citigroup and Goldman Sachs, Japan's Sumitomo Mitsui Financial Group, Daiwa Securities and Nomura, as well as Britain's Standard Chartered. "But remember that Paris wasn't really on the radar until the end of the electoral cycle this year," said Veron. "There are structural changes underway with the new government but those are very recent and will take time to become credible."
"Some international banks already have a subsidiary or branch in Frankfurt. It is much easier to use these entities as a base than build one from scratch in an unfamiliar jurisdiction," said one French banker on condition of anonymity. Paris can at least count on the large French banks bringing back employees when they scale down their operations in London. But it hasn't had any announcements by international banks to show for its efforts since HSBC's announcement last year that it was to relocate a thousand employees to the City of Light. Even this was a mitigated victory, as HSBC already has a local unit in France, so Paris was always going to be a natural choice for the bank. With competition to attract financial companies stiffening between Frankfurt, Dublin, Luxembourg, and Amsterdam "Paris suffers from negatives not linked to banking, like for example its labour laws," said Nicolas Fleuret, an associate at Deloitte.
"Banks also want a modicum of political stability. The beginning of the year, with the French presidential election, fed concerns," he told AFP. "More generally, comparisons in this area haven't been favourable for France in the past few years." One German financier said France's new business-friendly President Emmanuel Macron arrived on the scene too recently to change people's minds about his country's drawbacks. "Another big drawback for Paris was having a president (Francois Hollande) who said in his campaign that finance was the enemy" said the financier on condition of anonymity. "The president has changed but for many banks it was too late, they had already made their decisions."
But the game is far from over, experts said, noting that numerous banks haven't announced their intentions while many institutions have only planned for a minimum transfer of staff and operations given the lack of visibility on the terms of Britain's relations with the EU after it exits the bloc.
"We know of around a hundred banks searching for a new home for their European operations and only a couple dozen have made their choice," said Hubertus Vaeth, director of Frankfurt Main Finance, the association promoting the city to foreign banks. "By the number of announcements, Frankfurt is certainly ahead, but you've got to look into the details of how many jobs are effectively being moved, and most importantly which positions are being moved," said Fleuret. Paris Europlace, the group which is lobbying to attract London banks to the city, is unfazed by the recent announcements in favour of Frankfurt. "The several dozen jobs announced for Frankfurt don't represent yet a real relocation choice," said Arnaud de Bresson, Paris Europlace's managing director. "When it comes to relocating market operations it is Paris which will be best placed. Paris is the capital of the markets on the continent, while Frankfurt is a city of traditional finance," he said, noting that Paris already counted 150,000 jobs in the finance industry compared 70,000 for its German rival.
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