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Germany Sees Most Job Expansion by Foreign Banks Post Brexit

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Per a Reuters report, the Association of the Foreign Banks in Germany (VAB) expects that post Brexit, nearly 20 Britain-based banks will expand operations in Germany, as part of their plans to shift base for their European operations out of London.

Stefan Winter, the head of VAB, said, “This will involve up to 5,000 new jobs (in Germany) in the next two years, many of which will be hired locally.”

Till now, most Britain banks had their operations based at London, which is the region’s biggest financial center. However, now as Britain decides to leave the European Union (EU), these banks will potentially lose their “passporting rights,” which enabled them to open branches and conduct business easily in any part of the European territory.

Thus, these banks have started looking for possible options to base their operations as part of their contingency plans. While some of the banks have already set up offices in the EU or moved staff, others are yet to come up with their final decisions.

As of now, Frankfurt, Paris, Amsterdam and Dublin have emerged as the potential choices of banks. There is a sort of rivalry that has started amongst these cities, and each one of these is seeking to attract banks and staff from London.  

Notably, as part of the French labor reforms, Paris President Emmanuel Macron took measures to lower taxes and cut red tape for international bankers. While this move has appealed to banks like JPMorgan (JPM - Free Report) , Frankfurt, which is home to the European Central Bank has been a preferred choice of most of the other companies like Morgan Stanley (MS - Free Report) , Goldman Sachs (GS - Free Report) and UBS Group AG (UBS - Free Report) for base establishment of European operations.

In fact, the VAB expects majority of the jobs to shift to Frankfurt next year. Winter stated that he expects Frankfurt-based banks’ total assets to increase to almost €800 billion over the long term.

However, according to a person familiar with the matter, it is less likely that all the people who are currently working in their respective London offices will be the ones who will move to Frankfurt. The person noted, “Only 20 to 30 percent will actually relocate from London to Frankfurt, the reluctance to moving is quite high.”

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