Frankfurt Main Finance, the lobbying group, is warning that London will lose up to €800bn (£700bn) in assets to Frankfurt by March as banks begin moving business to Germany ahead of Brexit.
According to a report in The Guardian, the new data came after 30 banks and financial companies confirmed they chose Frankfurt for the city for their new EU headquarters. The lobbying group thinks that number will expand to 37 when JPMorgan, Goldman Sachs, and Morgan Stanley, which plan to spread operations across several cities, are accounted for. That will result in billions of pounds worth of assets leaving London for Germany, noted the report. “All in all, we expect a transfer of €750bn to €800bn in assets from London to Frankfurt, the majority of which will be transferred in the first quarter of 2019,” said Hubertus Väth, the managing director of Frankfurt Main Finance, in the report. The report noted that banks, insurance companies, and financial services firms are racing to get licenses and increase their workforces before the U.K. exits the European Union. In lieu of a trade deal between the U.K. and European Union, companies could have no way to replace lost passporting rights that let financial services firms work with clients across the entire bloc.
“Banks are faced with the choice of either relocating only what is absolutely necessary or preparing for the relocation of the entire business,” Väth said in the report. “In any case, it is clear that considerable second-round effects will follow,” he added, highlighting the possibility that further job losses and asset moves were on the horizon. The Guardian noted that Lloyds, Standard Chartered, Credit Suisse, Citigroup, and Nomura are among the banks that will expand or open new offices in Frankfurt due to Brexit. In recognition of that, Germany earlier in November moved closer to relaxing labor laws which had been viewed as a hurdle for banks to attract banking jobs. “Politicians have listened, promised and delivered,” Väth said. “This is a clear sign that the banks’ relocation to Germany is desired. It is a sign that is seen and appreciated.”