20 new high-rise buildings, 300,000 square meters of office space in the planning: Frankfurt is gearing up for the Exodus of London’s financial industry – one year after the Brexit vote of the British.
Whether it is a hard or soft Brexit, after the lower house election in the UK is still not fixed. Frankfurt is certainly a exit of the British from the European Union, and the time of the city plays into the hands. Because different financial institutions will soon have to make decisions on whether you stay on the Thames or in the Euro area. And then the chances are good that some will choose the city on the Main.
Three decisions would benefit the city to come: first, when the processing in Euro-denominated financial transactions, the so-called Euro clearing, from the river Thames to Frankfurt to migrate would, secondly, if the London-based European banking authority EBA to Frankfurt would be, and thirdly, if more foreign banks with their European headquarters to the Main move would be.
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The Crux Of The Euro Clearing
“The Euro clearing is the Central issue,” says Hubertus Väth, managing Director of the lobby, the Association Frankfurt Main Finance, in the state of Hesse, the city of Frankfurt banks, Deutsche Börse, scientists, and service providers. Are processed each day in these Clearing houses trade shops in the volume of about half a trillion euros. Banks with such securities against currency fluctuations or interest rate changes. But also export-oriented companies use derivatives as an insurance policy against fluctuations in the financial markets.
The importance of this business in the meantime, the politician, which had long held back by public demands. It goes to the question of where the oversight of these transactions from the Euro area is to be addressed. London had spread before the European court of justice that the Euro clearing within the EU must be settled, but not necessarily within the Euro area. Especially it concerns the rights of the Supervisory authorities. Because in connection with the recent financial crisis, it is clear that you can see in the Clearing of derivatives are already risks to the financial system. The business was of crucial importance for financial market stability, says Väth.
According to Michael Meister, Parliamentary state Secretary in the Federal Ministry of Finance, should be deducted the Clearing out of London. Because even if the British would recognise European law and the ECJ fully, would not have clarified the issue of the oversight of these transactions: The risks that arise for continental Europe, would also have to be out of the EU controlled: “This means either by a handle of the regulator to London and the UK, or an implementation of the corresponding business here, within the EU,” said master, in may, and since, for the first time with such clarity.
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Escape from the Brexit
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Escape from the Brexit
The EU Commission’s own proposals
The EU has laid in the last week, proposals on the table. Thereafter, the EU Commission is to get the power, a part of the billion-dollar business with Euro-current securities from the British capital to be deducted. Without a separate agreement between the EU and London, UK providers would lose their license for the EU-clearing trade for the 2019 planned withdrawal from the Union.
In view of the resignation “of one of the largest EU financial centres, we need to make certain adjustments in our rules,” said Vice-President of the Commission Valdis Dombrovskis last Tuesday. In fact, his authority is now missing, but to request a in the City of London initially feared automatic shifting of the Clearing houses on the continent.
According to the Commission’s proposal, it should be possible in the future, “to undertake a limited number of” Clearing houses to operate from within the EU. This applies to providers who were of such great importance for the stability of the financial system, the rules for Monitoring outside the EU were sufficient to minimise the potential risks.
Thousands of jobs in sight
Since clearing houses are not only relevant to the system, but also very lucrative, is likely to be the opposition on the island considerably. However, if the business should be brought in the Euro area, Frankfurt, as the location is in a good position, says Hubertus Väth of Frankfurt Main Finance. Because there is with Eurex Clearing on the location of the appropriate Institution, which had both the technology as well as the licenses. The consequence of relocation would be “thousands of jobs,” says Väth.
Also for the Relocation of the Bank supervision, the EBA, the chances of Frankfurt. At the end of may, only German Chancellor Angela Merkel reiterated the German Volks – and Raiffeisen banks the claim of Germany to the European authority, which employs 189 people. For their relocation to Frankfurt near the European Central Bank speaks. Still, there are Considerations that both parts of the banking supervision together. The EBA is for the rule-making, the ECB’s direct Supervisory responsibility.
The selection criteria for the future location of the EBA, the summit in Brussels are currently on the EU issue, Frankfurt. For example, the good accessibility: Frankfurt has the largest airport on the continent, the Rhine-Main airport, and the city has the required properties. 300,000 square metres of office space are in development, Twenty new high rises will be built in the next five years, six of them by 2020, says Hubertus Väth.
Good Conditions
The living room will also be created, as the city is expecting a growth of 15,000 to 20,000 people per year. Because, in the meantime, some banks have decided on their Europe-to relocate Headquarters to the Main. Non-European banks need a so-called EU passport, so that you can do business within the EU. You have purchased your license in the UK, you may only be after a Brexit in any EU-country longer.
Therefore, the desire of many banks to Frankfurt, although the city is competing with Dublin, Paris and Amsterdam. It is clear that the American banks JP Morgan and Goldman Sachs to expand its presence in the Main, the Silicon Valley Bank has opted for the financial metropolis on the Main. The Russian VTB wants to settle here, the Korean Woori Bank, which was not yet active in Europe, comes to Frankfurt, as well as the British Standard Chartered.
One to two Japanese banks will decide, apparently, in a nutshell, just another British Bank. A reason for the decision: “Of investment banks is to hear that the German financial supervision is doing a good Job,” says Gerhard Wiesheu, Partner of the banking house Metzler. He suspected, moreover, that the banks would only gradually build up jobs in Frankfurt: “First, you will only send 50 to 100,” he estimates. However, later it would be more than expected, not suspected only in the case of Metzler.