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M&A Bankers Being Quietly Shifted to Frankfurt Ahead of Brexit by Some Banks


11/07/2016


M&A Bankers Being Quietly Shifted to Frankfurt Ahead of Brexit by Some Banks
Boosting Frankfurt chances of being one of the financial centers to benefit most from Britain's vote to leave the European Union, global banks are quietly building up their investment banking teams in Frankfurt as the German deals market hots up.
 
Banks have been prompted to base more staff in Germany due to an expected pick-up in merger activity across Germany's chemical, manufacturing and drugs industries and a surge of Chinese investment in Europe's largest economy. This is contrary to the usual approach of putting most of their deal-makers in London. 
 
City and banking industry officials say that Frankfurt has already been bolstered by playing host to the European Central Bank and the EU's second biggest capital market and the trend puts Frankfurt in a good position to benefit from any shift of banking activity out of London after the Brexit vote.
 
"Germany is becoming a much more important market because it represents an increasing share of the global banking fee wallet," Alexander Doll, CEO of Barclays Germany told Reuters.
 
"Passporting" rights - an EU system that lets them operate across the bloc but be under the supervision of just one country's regulators, would most probably be lost by financial firms based in London when Britain leaves the EU.
 
And banks, insurers and fund managers are being encouraged to build up outposts in their cities and obtain "passports" there, driven by this possibility by other financial centers like Paris, Dublin and Luxembourg.
 
Till now, by offering big tax breaks or sending major government officials on big promotion trips, relying instead on a more low-key approach, Germany has so far refrained from 'rolling out the red carpet' to bankers unlike other European countries.
 
Frankfurt is marketing itself as a city where firms could base some operations without encouraging a mass exodus even with London still expected to remain a major financial center in Europe after Brexit.
 
"Banks are looking to keep the bulk of their operations in the UK but some are hedging their bets on Germany," said Alex Howard-Keyes, a partner at the London-based international head-hunting firm Alderbrooke.
 
"If they're going to have to have a foot on the ground in the euro zone, Frankfurt seems to be the best place. Frankfurt is a Brexit hedge plus it's in the biggest economy in Europe," he said.
 
He planned to base more bankers to cover the industrial sector in Frankfurt from London, the head of investment banking for Deutsche Bank in Europe, Middle East and Africa (EMEA) Alasdair Warren told Reuters last month. And to run its EMEA teams focused on the chemicals and car sectors in Frankfurt, roles that had formerly been in Paris, BNP Paribas appointed two senior bankers last month.
 
While there is no major flight out of London to the city, they are placing increased emphasis on the region, said several banks and head-hunters in Frankfurt, reports Reuters
 
In the coming months his firm plans to relocate several EMEA sector coverage teams to Frankfurt, which are currently based in London, one senior German banker, who declined to be named, reportedly told Reuters.
 
"We believe in the region and we believe in the market. This wasn't Brexit related, but I don't think it harms us in that context," said the banker, speaking anonymously as the plans have not yet been officially announced.
 
(Source:www.reuters.com)