Thomas spent 10 years working for an investment bank in London before he moved back to Amsterdam two years ago. For him, and many other Dutch bankers who quit the City to move home, the decision was a no-brainer.
“I never saw my kids when I worked in London. They were in bed when I left and when I got home,” he says. “When we had our third, and faced the prospect of British school fees, we had to leave.”
Bankers who have escaped the City for a new career in the Netherlands suggest that life is sweeter.
“I drive into work now, instead of cramming into a tube train,” says Stijn, another former City banker who's now a managing director in a local investment bank in Amsterdam. “I can drive to the beach in 40 minutes at the weekend. If I did the same in Fulham, I’d be stuck on Putney Bridge.”
Frankfurt has pulled ahead as the Brexit hub of choice as banks relocate jobs to ensure they maintain access to EU-based clients. Amsterdam, meanwhile, has captured an increasing number of trading firms such as MarketAxess and TradeWeb, as well as smaller investment banks like Royal Bank of Scotland, Japanese bank MUFG and Jefferies, which has just opened a new seven-person office to serve Benelux clients.
Amsterdam is seen as a dark horse in the battle for an estimated 10,000 banking jobs leaving London after Brexit, but bankers on the ground are both perplexed and frustrated by its failure to capture a bigger slice of the pie so far. They could do with more job opportunities - the Dutch banking sector has shrunk dramatically since the 2008 financial crisis, with most international firms pulling out, and local players cutting back.
“M&A and brokerage businesses have been decimated over the past ten years,” says Chris De Groot, managing partner at headhunters Financial Assets.
Lifestyle factors in Amsterdam should be a massive selling point for financial services organisations trying to convince their employees to move out of London, believe the bankers we spoke to.
“Frankfurt is so boring – Amsterdam is a vibrant city, and everyone speaks English. All the bankers I know in London are waiting for an opportunity to move here. I don’t understand it,” says Bram, who leads the fixed income team at a large local bank.
Bankers in London tend to cluster around the well-to-do boroughs of Putney, Fulham, Wandsworth and Clapham. Most working in the Netherlands embrace the country lifestyle. Instead of Amsterdam, they gather in the Haarlem area outside the Dutch capital in villages like Aerdenhout, Bloemendaal and Heemstede as well as commuter towns in the Het Gooi area. Both are a 25-minute drive into Amsterdam’s financial district and big houses cost €1m+ - the price of a three bed flat in Putney.
Then there are the schools. International schools in Frankfurt have been flooded with queries from bankers who could be posted there after Brexit. Frankfurt International School, the most expensive school in the city, charges €21,100 a year in tuition fees. The Netherlands has the fifth best education system in the world, according to the World Economic Forum, and it’s largely free (some schools charge €200 a year for supplies). The International School of Amsterdam charges a maximum of €23,350 a year.
“Pretty much everyone uses the state school system, no matter how much they earn,” says Bram.
But for all the lifestyle benefits, working in Amsterdam has its downsides. Career options are limited, jobs have been cut and banks have been rolling out new programmes to give their juniors exposure to clients earlier – just to stop the exodus to London.
“We tell graduates that they’ll have more responsibility if they stay in Amsterdam. It’s a challenge – they all want to start in the City,” says Stijn.
While Amsterdam has attracted high-speed trading houses, the big banks have been chopping their trading desks. ING cut 43 traders in Amsterdam and moved 23 to London in May. Boudewijn Vellinga, an associate partner at financial services headhunters Holtrop Ravesloot, says that banks have cut up to 20% of their fixed income teams in recent years.
“A lot of former bank traders have set up their own investment management shops by the canal so that they can take risk again. Others have set up their own wineries or art galleries. Then there’s fintech, but few traders are willing to take a haircut in pay for this, so a lot stick it out the banks,” he says.
Compared to London, pay in the Amsterdam financial sector is low. Front office roles for analysts in investment banks pay around €43k, according to headhunters, rising to a maximum of €67k for associates. In London, analyst salaries start at £50k (€56k), according to Dartmouth Partners, and up to £120k for third-year associates.
The best paid roles in trading are within equities, according to figures from Holtrop Ravesloot, with managing directors in this area earning salaries of up to €220k (£193k). MD salaries in London are typically £350-550k.
In theory, it’s much harder to fire someone in the Netherlands. You need a good reason – underperformance or economic causes are the most frequently used – but even then employers have to jump through a series of hurdles, including offering to redeploy an employee elsewhere, and create an ‘employment termination agreement’ that the staff member has to agree to. If they don’t, it goes to court, and if the court throws out the case, the employee stays put.
Banks, which have rolled out numerous restructurings in the past ten years, typically circumvent a lengthy court case by offering a good deal, says Floris van de Bult, partner and head of the employment practice at Clifford Chance in Amsterdam.
“In practice we still quite regularly see one month’s salary per year of service, whereas on average in court employees would get a third of a month’s salary for every year with the firm,” he says.
Banks used to rolling out redundancies at the merest whiff of underperformance in London have balked at tough labour laws in Germany and have pushed for reform.
Still, the employee-friendly laws in the Netherlands were not a “show stopper” for banks, says van de Bult. “The whole issue with the 20% bonus cap – and not being able to remunerate their staff competitively – was a much bigger sticking point,” he said.
While the rest of the EU restricts bonuses for bankers at 100% of salary, the Netherlands does not allow big financial services organisations to pay more than 20%. In June, the Dutch parliament voted in a motion to scrap this, but this is not binding, and the government has also offered to ease it for foreign banks if they employ at least three quarters of their staff outside the Netherlands.
The bonus cap does not apply to small trading firms, which are heavily dependent on paying big sums in variable remuneration. De Groot says that base salaries are typically €40k, but top traders can bring in €3-4m in bonuses.
There remains a resistance to scrapping the bonus cap, however, as the public “still haven’t forgiven bankers” for the financial crisis, according to some we spoke to.
“It’s not like I have to pretend to be a teacher at dinner parties, but I’ve had some rigorous debates with friends who can’t understand why anyone could deserve more than a 20% bonus,” says Stijn. “It gets awkward.”
“Bankers still have a bad reputation,” says Thomas. “The government talks up the benefits for the economy, but the public still sees rich bankers coming in, pushing up house prices and potentially causing another crisis.”
Bloomberg estimates that of the announced Brexit job moves so far, Frankfurt will get 3,050. RBS said that 150 jobs would move to Amsterdam, while MUFG is reportedly likely to initially move around 100 positions. Still, as well as the trading houses, Amsterdam is on the shortlist as a possible new Brexit base for the world’s largest asset management firm, BlackRock.
Financial Asset’s De Groot, who has beaten the drum for Amsterdam as the ideal location for post-Brexit moves, says that the buy-side is the biggest opportunity for the city.
“The competition isn’t over. If one big asset manager comes here, others will follow. And I still think that if banks listen to what their employees want, more banking jobs will come here too,” he says.
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