The deputy governor of the Bank of England Sam Woods warned on Thursday that unless the UK and the EU reach a transitional agreement by Christmas, banks will trigger their relocation contingency plans.
But for Wall Street behemoths that is already too late. Goldman Sachs, Morgan Stanley, JP Morgan, and Citi Banks have signed or are negotiating the conclusion of long term lease agreements for office space in Frankfurt, Reuters reported on Thursday.
According to Reuters, Goldman Sachs has concluded a lease agreement for the top eight floors of the Marienturm building in Frankfurt, spanning over 10,000 square meters. The Walls Street behemoth is planning to bolster is work force in the Eurozone’s financial capital from 200 to 1000 employees.
Two more banks are established in the very same 37-storey building, that is, Morgan Stanley and JP Morgan. However, they are extending their leases to occupy more floor space. Citi bank is expanding within its own Welle building near the opera house.
All these Wall Street behemoths are planning to relocate from London, undermining the UK’s biggest tax and exports industry. The UK government has been negotiating for access to the Single Market for British goods and services, with an emphasis on the latter. Frankfurt expects a minimum of 10,000 jobs in the financial sector as a result of Brexit. These will be followed by 41,000 employees ranging from anything from constructions workers to taxi drivers.
To date, London ranks first in the world in the Global Financial Index that measures the overall business environment, financial sector development, infrastructure factors, human capital, reputation and general lifestyle factors of financial centres. In the same index, Frankfurt ranks 23rd.
The city hosts the European Central Bank and the Deutsche Börse, that is, Europe’s biggest stock market that came close to taking over London’s Stock Exchange. From a regulatory perspective, the German city is as close to a rule-maker as one can get in post-Brexit Europe. However, most analysts signal the city as a destination for regulatory experts rather than investment bankers.
However, infrastructure, culture, and night life in Frankfurt are “provincial” in comparison to cities like Amsterdam, Paris, or even Dublin. With a population of just under 730,000 people, Frankfurt is already experiencing a housing crisis comparable only to Dublin.