IBS Journal August 2017
11
Deutsche Bank and Citigroup plan to strengthen operations in Frankfurt
F
rankfurt’s chances of becoming EU’s favourite post-Brexit financial centre received a boost recently as details
emerged of Deutsche Bank and Citigroup’s plans to strengthen their operations in the German financial capital.
In an internal video broadcast to all staff, Deutsche Bank, chief executive John Cryan told staff that Germany’s biggest bank will begin to book the “vast majority” of the assets in its UK global markets business to Frankfurt.
Jim Cowles, Citigroup’s EMEA chief, told his staff that the bank had decided to move its EU broker dealer – its main trading operation – to Frankfurt, but would sprinkle some other business units across Amsterdam, Dublin, Madrid, Paris and Luxembourg.
Frankfurt has been stealing opportunities from Dublin, Paris and Luxembourg, in the contest to win banking jobs and tax revenues from London ahead of Britain’s departure from the EU, set for a hard crunch in March 2019.
Many banks are choosing Frankfurt as a new base in the wake of Brexit
need to be either moved or at least added in Frankfurt. The worst outcome is always likely to be worse than people imagine,” he said. The internal video was first reported by Bloomberg.
This queue of banks out of the UK is enormously aided by the presence of the eurozone banking regulator at the European Central Bank. Frankfurt has a particular edge in attracting the financial market trading operations that global investment banks need to move to London to avoid being cut off from their EU clients.
John Cryan told staff that the group could not afford to wait for the outcome of Brexit negotiations before the bank acted, and warned that he was “assuming a reasonable worst outcome” from the talks.
The bank plans to start a new Frankfurt booking centre and transfer most of the investment banking assets it books in the UK. It will keep its London-based booking centre, but its importance will be massively downgraded, losing the UK hundreds of billions of euros of non-UK business usually done through its broker dealer, which is the biggest EU bank branch operating in the UK.
“There’s an awful lot of detail to be ironed out and agreed; depending on what the rules and regulations turn out to be, we will try to minimise disruption for our clients and for our own people,” said Mr Cryan in the video. “But inevitably roles will
Citi has told staff it will create about 150 jobs across Frankfurt, Amsterdam, Dublin, Luxembourg, Madrid and Paris as a consequence of the UK’s departure from the EU. Most of the jobs will be in Frankfurt.
“Frankfurt is our first choice for headquartering our EU broker- dealer based on the existing infrastructure, and the people and expertise we already have on the ground,” Mr Cowles said in an internal memo.
Mr Cowles said: “In all cases, London will remain both our EMEA headquarters and an important global hub for Citi.“
In a bid to win more business Frankfurt is changing its laws to offer bankers classed as “risk takers” an exemption from aspects of its labour laws, which make it difficult to fire people.
Banks that have announced they have chosen to make Frankfurt their new EU base include Japan’s Nomura, Daiwa and Sumitomo Mitsui Financial, as well as the UK’s Standard Chartered. US groups, including JPMorgan Chase and Goldman Sachs, are also rumoured to be making the German city their new EU base.
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