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Will Frankfurt soon become the new seat of Europe’s Financial Supervisors?

It kicked off with the Brexit referendum on June 23, 2016, but the real consequences are only gradually becoming apparent. The fact is that Brexit totally changes the European financial landscape. London is no longer a suitable location for EU institutions, including the European Banking Authority (EBA) and the Association for Financial Markets in Europe (AFME). The AFME responded to the Brexit vote by opening a branch office in Frankfurt earlier this year. And the EBA is now looking for a new home, with Frankfurt being considered as one option. Germany’s Finance Minister, Wolfgang Schäuble, is making a strong case for the Main Metropolis to be chosen as the EBA’s new headquarters. Germany has officially applied for a switch to Frankfurt.

Frankfurt: In the heart of Europe

199 banks currently call Frankfurt home, as do institutions such as the European Central Bank (ECB), the European Systemic Risk Board (ESRB), the European System of Financial Supervision (ESFS), the European Insurance and Occupational Pensions Authority (EIOPA), the Federal Agency for Financial Market Stabilization and the German Bundesbank. EUREX, the derivatives exchange, together with numerous ratings agencies and law firms, especially those that focus on the world of finance, have also set up bases in Frankfurt. The EBA would certainly be in good company, and would retain its place at the pulse of the financial industry. Better yet, as well as being the established home of financial institutions and authorities, Frankfurt also offers something else: short distances. Germany is at the geographical heart of Europe, which means that the EBA would be quickly accessible to all EU member states.  Frankfurt Airport is one of the largest in Europe, offering direct flights to destinations all over the world. What’s more, Frankfurt’s central rail station links major European cities such as Berlin, Amsterdam, Brussels and Paris.

International flair and a singular skyline

A host of prestigious universities and colleges give companies access to qualified and skilled personnel. Frankfurt is also the only German city with a distinctive, impressive skyline, which adds unique character to the city’s international flair. The Main Metropolis is an extremely attractive location, and not just for banks. Some 240,000 sqm of office space was let in the first six months of 2017 alone. A number of major international finance companies, especially those that want to be sure they can continue doing business in the EU after Brexit, have already initiated proactive relocation strategies – Citigroup has announced it will be moving its trading division, along with parts of its investment banking operations, to Frankfurt. Morgan Stanley, JP Morgan and Goldman Sachs are also eyeing up Germany's banking city. A major Japanese bank, Sumitomo Mitsui Financial Group, also recently opted for the Main Metropolis, following on the heels of its compatriots, Daiwa Securities and Nomura.

According to a survey conducted by the Center for Financial Studies (CFS), 86 percent of financial experts predict that Frankfurt will benefit most from Brexit. Securing the new headquarters of the EBA could be just the beginning. 

 

Picture credit:

Title: Skyline Frankfurt © Fotolia