Frankfurt in pole position to benefit from Brexit

Frankfurt is one of the cities in pole position to benefit from the Brexit as more and more companies seek to move staff out of the UK.

The number of financial services companies looking to relocate staff abroad after the Brexit increased in July, according to Ernst&Young’s EY Brexit Tracker, which was published in the same month.

According to the quarterly survey, 59 out of the 222 companies surveyed said they have started moving staff and operations out of the UK as the result of the Brexit, up from 53 companies in March. Of the companies surveyed, 18 said they were looking at Frankfurt/Germany, 19 cited Dublin/Ireland, 11 identified Luxembourg as a likely location and 15 said they are considering moving staff and operations elsewhere but have not homed in on a preferred location.

‘Frankfurt, Dublin, and Luxembourg are currently coming out on top,’ said Omar Ali, EY’s UK financial services leader. ‘These operational changes also highlight a real risk to European businesses and the wider economy, as the fragmentation of European financial services could increase costs and limit the breadth and depth of finance options for European corporates.’

Financial services companies are looking to make sure they can continue to conduct business across the EU, whilst retaining a strong base in London, and they are now starting to select potential European locations, according to Ali. In a sign of things to come, 23 banks, asset managers and insurers have opened or bolstered EU subsidiaries since the referendum, up from 18 companies in March 2017.

HSBC’s chief executive Stuart Gulliver has said that about 1,000 of HSBC’s 43,000 jobs in the UK will probably move to mainland Europe, underscoring comments made in January by JP Morgan head Jamie Dimon who intends to increase the number of staff at JP Morgan’s Frankfurt office.

‘The difference three months on from the triggering of Article 50 is that we are seeing major financial brands put their contingency plans into action. Over a quarter of the companies we track have suggested there will be potential changes to their London base as a result of Brexit,’ said Ali. ‘This process will only accelerate as firms finalise their submissions to the regulators on their Brexit plans.’

The EY Brexit Tracker monitors the public statements made by 222 of the largest financial services companies with significant operations in the UK across wealth and asset management firms, investment and retail banks, private equity, insurance and FinTech. The tracker captures statements made on key issues across sub-sectors relating to staffing, domicile, financial impact, policy asks, product changes, remuneration and opportunities.