Investment bankers in London are fearful that their jobs could go to Frankfurt. But is the German city really the most likely beneficiary as large financial services organisations look to relocate functions after the Brexit vote?
Investment banking employees certainly believe that Frankfurt is the most likely destination if jobs start to gravitate out of the City. 27.6% of respondents working in investment banking believed that jobs would end up there if they moved out of London, according to our survey of 1,800 finance professionals.
But, this could be a misconception. Few banks said anything of substance about their Brexit plans during the latest rounds of Q2 reporting, but those that did mention alternatives to London rarely talked about Frankfurt.
Credit Suisse said it had “optionality” to move people to Dublin or Luxembourg, Barclays also said these two locations could be more important, HSBC is eyeing Paris, while SocGen said it has no need to move people out of London at all. UBS did highlight its German operations, but also has a fully-licensed subsidiary in France.
There’s a bigger question mark over the U.S. investment banks, but in its leaked Brexit plan, Deutsche Bank suggested that Ireland, France and Luxembourg would be better alternatives for all its competitors apart from Goldman Sachs.
John Cryan, Deutsche’s CEO, even implied that the German bank wouldn’t have to move jobs back to Frankfurt because it’s UK operation is a subsidiary of its home country HQ.
“I lot of people are quite fearful of the prospect of a move to Frankfurt. It’s not as cosmopolitan compared to London and the infrastructure isn’t as scalable to accommodate a mass influx of people,” said Logan Naidu, CEO of headhunters Dartmouth Partners. “Banks in London are still recruiting from Germany – particularly at the junior level. London’s allure hasn’t dulled for younger bankers.”
All of this isn’t to say that Frankfurt won’t benefit from Brexit. It’s making a play – along with Dublin, Luxembourg and Paris – to lure more jobs from London. But, you shouldn’t assume it’s the most obvious choice.
One Frankfurt-based investment banking analyst we spoke to says that expectations are still relatively low among finance professionals on the ground, and that IBD professionals in Germany are still hoping to move to the UK.
“Working in Germany is a good training ground. The hours are long in London, but you rarely get out of the office here before 3am. Call it an inferiority complex, but senior management put pressure on the juniors here to work harder,” she said.
Buy-side moves to Dublin
The largest proportion of asset management and hedge fund professionals believe that Dublin is the most likely location if jobs start moving out of London.
24.4% of asset management professionals said that they thought London jobs were most likely to head to Dublin, marginally more than the 23.4% who believed Frankfurt was the most likely beneficiary. 26.6% of hedge fund employees said Dublin was the
Asset management firms have already started moving jobs out of London to the Irish capital, and Citadel’s decision to launch an Irish operation suggests that it could be an alternative location for international hedge funds looking outside of London.
However, asset management firms have reportedly been offering to pay for employment visas for EU employees after the Brexit vote and are looking for legal advice on how to keep these staff members in the UK.
Photo: Robert Daly/Getty Images