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29 November 2018

Financial Times: Banks to relocate up to €800bn in assets to Frankfurt after Brexit

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The total assets held by domestic and international banks in Frankfurt is poised to rise by more than a fifth in early 2019 as Brexit prompts London-based lenders to relocate several hundreds of billions of euros to Germany’s financial central over the coming months.

Based on conversations with lenders and consultants, financial marketing group Frankfurt Main Finance estimates that the 30 lenders who are moving operations from Britain to Germany will shift €750- €800bn in assets to the German city.

At the moment, the lenders who are already based in Frankfurt hold around €3.5tn in assets in the city. “The majority [of the additional assets] will be transferred in the first quarter of 2019,” said Hubertus Väth, the Managing Director of Frankfurt Main Finance. He estimates that Germany’s largest lender Deutsche Bank, which will move parts of its investment bank operations from London to Frankfurt, will account for up to a third of the total increase in Frankfurt-based assets.

As Frankfurt Main Finance pointed out, 30 of the 37 financial institutions which have applied to the ECB for new or extended licenses have chosen Frankfurt as their European headquarter. Moreover, half a dozen lenders that are headquartering elsewhere in the EU will move some operations to Frankfurt.

Mr Väth is expecting that the balance sheet of banks who moved to Frankfurt because of Brexit will rise further over time, as some lenders initially try to relocate as little as possible. “It is clear that considerable second-round effects will follow.” However, Frankfurt Main Finance toned down its estimate on the labour market benefits. While it still predicts that around 10,000 additional jobs will be created in Frankfurt, it now expects it will take eight rather than five years for this growth to materialise.

Full article on Financial Times (subscription required)

© Financial Times

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