Sorry, Merkel! German banks red-faced as job cuts cripple Frankfurt – Brexit bubble bursts

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New analysts at Landesbank Hessen-Thüringen (Helaba) expects Brexit to generate employment for the German banking centre in Frankfurt with a total of 3,500 jobs. The financial centre can expect around 1,500 new jobs this year and next.

Dr Gertrud Traud, chief economist at Helaba, said: “After all, the Brexit banks selected Frankfurt as their favourite soon after the referendum and gradually started to relocate their business from the Thames to the Main.”

Financial jobs in the city have generally been on the rise since 2014 amid greater demand for staff overseeing compliance and regulation at banks, and as Britain’s withdrawal from the European Union lured jobs from London.

However, the new study found by the end of 2023 the Frankfurt banks will have around 62,200 employees.

This is five percent less than in autumn 2020.

This comes as Frankfurt’s financial centre is facing special challenges including persistently low-interest rates, increasing digitalisation and the coronavirus pandemic.

Ulrike Bischoff, author of the study, said: “The regulation of financial services between the EU and the UK is a tough process as is Brexit itself.

“Comprehensive equivalence regulation by the EU for Great Britain is unlikely in the near future, and individual equivalence decisions are also uncertain.

“This would mean British Directives with which the EU would be recognised as equivalent.

“Looking ahead, there is a risk of regulatory arbitrage.

“After all, Brexit offers the opportunity to regulate regulations that have long been considered inappropriate now to change for their own market.”

She added: “Depending on regulatory modifications on both sides leading to avoidance of a harmful competition for all involved should be done with a sense of proportion, the European financial centre architecture will change in the medium to long term.”

Ms Bischoff admitted: “Despite the positive effect of Brexit, employment in the German banking centre will decline over the next few years.

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“This is ensured by the ongoing consolidation, which has been intensified by the Corona crisis.

“The still challenging framework conditions speak for a significant reduction in bank employment in the coming years.”

She continued: “The German financial centre should now resolutely meet its challenges and opportunities.

“Confident, concerted marketing is essential for successful further development in international competition and driving key trends in the financial sector – above all ‘Sustainable Finance’.”

Frankfurt is home to Deutsche Bank, Commerzbank, and the European Central Bank as well as the European headquarters for scores of non-German banks.

Frankfurt has been dubbed Bankfurt or Mainhattan, after the river Main that the city straddles.

According to the Helaba study, there will be around 1,500 new jobs in Frankfurt as a result of Brexit this year and next.

And so far, around 2,000 jobs have been created since Britain left the European Union.

While the Main metropolis competes against other EU cities such as Paris, Dublin and Amsterdam, the relocation has been slow.

The Helaba research said this was due to certain areas of the regulation of financial services not yet being clarified.

Additional reporting by Monika Pallenberg

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