Frankfurt and Dublin make Bankers feel Desired in Battle for Brexit jobs

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Frankfurt and Dublin make bankers feel wanted in Conflict for Brexit jobs

Some bankers, however, remain skeptical that his administration can change labor laws and the taxation system, which they say are major deterrents to setting up in France.

Banks, however, are holding off on transferring large numbers of people yet, focusing on ensuring they have the right legal and operational framework to do business in the EU if Britain fails to negotiate a positive exit deal, executives say.   Citi for example has said the maximum number of jobs it may want to shift out of London is just around 150.
To Wall Street bankers this past year, is having the desired effect.

“These investments are won through engagement at a senior level. We weren’t trying to build connections from scratch,” IDA chief executive Martin Shanahan told Reuters.

Slideshow (8 Images)

Kieran Donoghue, IDA Ireland’s head of International Financial Services poses for a picture in London, Britain, August 14, 2017. Hannah McKay

EXPENSE AND DISRUPTION

Morgan Stanley, Citi and JPMorgan state Frankfurt will be their EU trading foundation after Brexit. However, Vaeth told Reuters: “The plan was to be subtle.

While Paris and Amsterdam are put to lure a couple of major lenders, Germany and Ireland have so far secured the majority of obligations from big-name banks.
Having attracted all 10 of the world’s largest pharmaceutical companies in addition to technology firms like Google, Facebook and Apple, Ireland moved pre-emptively to cancel any economic damage inflicted when Britain – its second biggest export market – leaves the EU.
Merkel, who’s seeking re-election next month, left town and Hesse officials to do the rounds in New York.

“Bankers want reassurance that the government needs them,” one senior banking executive told Reuters.   “Business does care about political belief towards them. There is a reason: if there are issues you understand that government will use its powers to help you.”
Germany has preferred a subtle approach, with Chancellor Merkel saying little if anything in public on what’s a sensitive issue in the home. Instead she relied on Volker Bouffier, prime minister of the state of Hesse where Frankfurt is located, to take her invitation to New York in November, according to three sources familiar with the discussions.

“Most banks are seeking to minimize disruption and expense by relocating as little as possible in the first instance,” said Matt Austen, UK head of financial services at Oliver Wyman.
Local officials have had fewer inhibitions than the federal politicians. The Frankfurt Main Finance lobby group went on more than 50 trips to overseas banks’ home bases in the last year. “We have had indications that two thirds of the major banks’ moves is to Frankfurt,” lead campaigner Hubertus Vaeth said.

Paris also assembled a group of top lobbyists including a number of France’s most respected business executives. Teams moved to meet bankers in New York.

MASSIVE BENEFITS

Banks have been undertaking legal, economic and financial analysis in selecting new foundations for their EU business if it can no more be achieved from London. But they must also be aware of the political climate will be favorable.
Recently Morgan Stanley, Citi and Bank of America as well as Japan’s Nomura, Mizuho and Sumitomo Mitsui have declared choices for new EU headquarters, all opting for Frankfurt or Dublin.

Dublin has bagged the projected EU headquarters of Barclays and Bank of America. JPMorgan has bought a building in town, and is expected to move more middle and back office tasks – such as risk management and deal processing – there.

French banks are also expected to transfer back some staff now based in London.

The worry for Dublin and Frankfurt is that banks could set up the EU legal entities for their trading companies in the towns, leaving federal regulators with the task of overseeing their massive balance sheets, but with the majority of jobs staying in London or put elsewhere in the EU.

German taxpayers had to finance a series of bank bailouts during the crisis, and the bad memories stay because of Deutsche Bank. While Germany’s biggest bank did not needed rescuing, it’s run up a lawsuit bill of 15 billion euros ($17.5 billion) since 2009 because of extravagant market bets and misconduct.

When billboards went up around London following the referendum extolling Paris as a financial center, IDA officials were already in boardrooms making their pitch for Dublin.

IDA Ireland, the state agency charged with winning overseas business, began meeting banks three months before Britons voted
As a medium-sized provincial town, Frankfurt has also been proclaiming its cultural attractions. That involved taking Wall Street companies to the city’s English-language theater and Japanese bankers to see the Eintracht Frankfurt soccer team play.

Politicians posing with bankers were close to anathema since a collapse of the Irish financial system forced the country to take an international bailout in 2010, bringing austerity policies which hurt voters badly.

“It would have been easy to set up there also. But in the end of day it involved a fascinating issue around the country’s credit rating. We felt big institutional investors would prefer Germany,” he said.

LONDON/DUBLIN (Reuters) – “I am here to send you the regards of the Federal Chancellor. I am entitled to tell you we want you in Germany.” This personal message from Angela Merkel, delivered with a regional politician
“There is a 50 percent chance of getting clearing business move to Frankfurt,” said Vaeth. The amount of jobs would be relatively modest, but he added: “Success would mean 100 billion euros of assets … The long term benefits are massive.”
Rival centers are continuing on to another struggle to win over clearing houses for the likes of euro-denoninated derivatives, with Frankfurt and Paris the main contenders.
These cities’ victory follows year-long campaigns, as government agencies and lobby groups staged a charm offensive with the banks hidden since the 2007-09 crisis.
Supervisors are on guard for setups which are little more than fronts for staff still working in London. The European Central Bank has repeatedly warned that “shell” operations will not be accepted.

However, other lenders proved reluctant to make any decision in favor of Paris before knowing the outcome of elections in May.
Irish leaders are less reticent, but both countries have sent the same welcoming message to U.S., Japanese and other overseas banks – regardless of the public unpopularity of bankers that still lingers after the international financial crisis.

Many banks’ concerns still center on issues like a nation’s regulatory regimes, infrastructure and market.
The Irish governmental welcome has been more evident. New Prime Minister Leo Varadkar, building on work by his predecessor Enda Kenny, has met several bank supervisors and posted a picture on his website of him grinning with Bank of America CEO Brian Moynihan.
Ireland has adopted similar sporting tactics. When Dublin hosted an American Football game between Boston College and Georgia Tech last year, government ministers worked the room at a supper of 500 executives in Boston and Atlanta, including State Street CEO Jay Hooley.
Bill Winters, chief executive at Standard Chartered, told Reuters his bank opted for Frankfurt as its new EU foundation because of Germany’s AAA credit rating. With Ireland’s rating up to six notches lower, that went against Dublin.
The largest global banks in London have indicated that roughly 9,600 jobs could go to the continent or Ireland in the next two years, though few have yet moved, based on public statements and data from industry sources.

BAILOUT MEMORIES

Even then, the work of lobbyists isn’t over: they’re pushing to host the enormous business of clearing deals in euro-denominated securities, now dominated by the British capital.
Extra banking jobs and tax revenue are vital for Ireland, a small market that has relied for decades on overseas investment.

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