July 1, AtoZForex – A week has passed since the shocking Brexit vote, and the consequences are still emerging all over the world. One of these unpleasant outcomes is that a large number of firms and banks will move their assets away from the UK. Yet, where to and what is the trend? Currently, there are plenty of European cities that can attract London bankers.
Earlier this week, AtoZForex already disclosed the list of preliminary decisions of the major investment banks on relocating its operations away from the UK:
– JP Morgan contemplates to relocate a quarter of its UK workers to the EU: 16,000 jobs.
– HSBC keeps its UK headquarter but plans to move 1,000 employees to Paris.
– Citigroup needs to rebalance its operations in the EU, in order to retain passporing rights.
– Morgan Stanley considers to relocate 1,000 employees
– Goldman Sachs plans to move some offices to the continental Europe
– EBA will move its headquarters out of London.
As currently the biggest investment firms and banks are searching for a possible alternative to relocate their employees, AtoZForex has drafted the list of potential cities-substitutes for the British capital.
Frankfurt is enthusiastic about welcoming the escaping bankers leaving London. Frankfurt is already a home for European Central Bank (ECB).
According to the EU legal framework, insurance companies, and banks can operate anywhere across the Eurozone if they set up the operations in one of its member states. Before, the choice fell on London, but considering the latest events, Frankfurt can become the next financial city of EU. As it was commented by the body representing Frankfurt’s finance industry, Frankfurt Main Finance:
“Frankfurt is well-equipped as a stable financial center to embrace those looking for a new base of operations within the Eurozone.”
Additionally, Frankfurt is regularly scoring high on quality-of-living rankings. According to Mercer’s 2016 survey, Frankfurt is the 7th top place to live, leaving behind the New York, London, and Paris.
Luxembourg may be small, but it possesses a huge power when it comes to finance and banking, The Grand Duchy is already home to 143 banks with combined assets accumulating to the value of 800 billion euros ($885 billion).
Luxembourg is a cosmopolitan city – almost half of its 563,000 inhabitants are foreign. The country is also home to the European headquarters of several big global companies, such as Delphi, Skype, and Paypal. These conditions combined with low corporate taxes in Luxembourg make the country a piece of pie for London-based bankers.
Paris-based financial services firms manage 2.6 trillion euros worth of assets, as it is reported by French officials. The French capital is also a home for Euronext, which is the second large stock exchange after London. Paris also serves as a key for the bond markets, as the city carries out almost 35% of total bond issues in the Eurozone.
One thing that can make the big number of international firms and banks hesitant is a French strong worker protection laws.
Moving to the Irish capital, the city is already challenging London in technology development level. The headquarters of Facebook, Google, Dropbox and Twitter are established in Dublin.
The main language in Dublin is English, which is also a big advantage for the international firms from London. According to the Dublin’s International Services Centre, more than half of the world’s leading financial services firms already have established their subsidiaries in the Irish capital.
German city’s attractive culture scene and cheap rents are serving as a huge magnet for a younger tech talent. Berlin claims a startup founded every 20 minutes. The city is also home to such companies as Wooga, Zalando, SoundCloud and Delivery Hero.
Also, the biggest part of the money invested in Germany in 2015 was allocated in Berlin.
The next one in the list of the cities that can attract London bankers is Amsterdam. Amsterdam is a fast growing European city and it is on its way to becoming one of the leading tech centers of EU. The regional offices of big companies, such as Uber, Tesla, and Netflix are established in the capital of Netherlands. What is more, the Amsterdam Internet Exchange is now one of the world’s biggest data transport centers.
As for Scotland, the leaders believe that remaining in the EU will be better off for the country, even though they will need to go through the referendum to gain the independence from the UK.
Edinburgh is the UK’s second largest financial center after London. It is also a home to a cluster of assets management firms. The Royal Bank of Scotland (RBS) headquarters are located there.
All in all, the biggest European cities are eager to welcome the bankers and other international companies from London. This, unfortunately for UK capital, will create the outward drain of funds and assets from London.
Think we missed something? What are your thoughts on this matter? Let us know in the comments section.