
Frankfurt Is the Big Winner in Battle for Brexit Bankers - JumpCrisscross
https://www.bloomberg.com/graphics/2017-brexit-bankers/
======
geff82
Frankfurter here :) Nice to see us on the good side of news more often
recently. Frankfurt, compared to the big capitals of the world, is rather
small: about 700.000 reside within the city limits. Yet, the metropolitan area
is much larger. Frankfurt also has the highest percentage of foreigners in
Germany (ok, Offenbach, Frankfurt's neighbour even has more, but those two are
at the top). Even Berlin feels less international in this regard. And in case
you need to have a break from this most modern looking German city, you just
take a plane at the airport (which is almost "in the city" and very easy to
reach). On weekends, you can to trips to France, Czech Republic, Luxembourg,
Netherlands, Belgium or Switzerland (all within 2-4 hour drive). It's
internationality also makes Frankfurt easy to navigate for people who don't
speak German. By the way: there are only few "real Frankfurters" like me there
(born and raised here with German parents...). Even other Germans mostly moved
here from other cities. Within my close colleagues, I am the exception as
someone who spent almost his entire life here. What that means: we are pretty
open for everyone. We don't care where you are from, we don't prefer doing
business with people that speak the local dialect (which might happen in other
parts of Germany). Talking business: I doubt you find a city with more
libertarian-minded entrepreneurs in Germany. Business enthusiasm is quite high
compared to other regions where social democratic culture is more imminent.
People come to Frankfurt to make money.

If you want to live in beautiful luxury, you are also at the right spot! The
Taunus mountains north-west of the city house a myriad of bankers and CEOs in
beautiful and expensive villas, combine perfect schools with healthy nature
and nice views on the city. You'll have to buy something more sporty than a
Porsche to get some looks, as Porsche is the standard family car there (or
High-End BMWs or Mercedes)... If, besides work, you want to enjoy culture,
this city serves you plenty. Museums, Opera, Theaters, Rock concerts: here,
you have them all.

So to those you wonder if Frankfurt is really the place to go, I say: I love
the world, I like many other places, but if I could, I would take my Frankfurt
anywhere I go.

~~~
moomin
Londoner here. Been to Frankfurt: it's small, but it's lovely. Only thing
holding me back from moving is a mortgage and school-age children.

(Rant: Seriously, people get upset when you point out that Brexit is a dumb
idea. But that doesn't stop it being a really, really, dumb idea that's going
to ruin my country.)

~~~
ZenoArrow
> "(Rant: Seriously, people get upset when you point out that Brexit is a dumb
> idea. But that doesn't stop it being a really, really, dumb idea that's
> going to ruin my country.)"

How is it going to ruin our country?

Let's be realistic. Will there be an economic downturn? Signs point to yes.
However, businesses do not pass up the opportunity to make money for long.

Case in point, the financial sector move the article is referring to. Just
because a bank is based in one country, doesn't mean it doesn't do business
elsewhere. If an investment opportunity exists, deals will still be made
regardless. The idea that a company like Goldman Sachs would turn down an
opportunity to make money just because their headquarters is elsewhere is
almost laughable.

Imports and exports will be affected whilst markets adjust, and hopefully
there'll be a soft Brexit to make this adjustment period quicker, but even
with hard Brexit the economy will stabilise and grow in time. Products
intended for domestic markets may end up becoming more attractive for
investors in the short term whilst this period of uncertainty plays out. There
are always ways to make money, and those who keep their cool are much more
likely to spot those opportunities than those who panic.

~~~
technofiend
>Case in point, the financial sector move the article is referring to. Just
because a bank is based in one country, doesn't mean it doesn't do business
elsewhere. If an investment opportunity exists, deals will still be made
regardless. The idea that a company like Goldman Sachs would turn down an
opportunity to make money just because their headquarters is elsewhere is
almost laughable.

So your argument is Goldman Sachs, Merrill Lynch, etc will continue to do
business in Britain because it'll be profitable to do so? Yes that's probably
true. On the other hand they are bending to regulation that requires them to
conduct EU-related business in an EU member state.

And as you have stated businesses will not turn down potential profit.
Therefore they have no choice but to move the jobs to where the _majority_ of
the business is __and that 's no longer Britain __.

There's no element of panic here, just the fact that brexit means certain jobs
have to move in order to continue conducting business with the EU.

The EU are already positioning to move Euro clearing out of London as well.
See [https://www.theguardian.com/business/2017/feb/07/brexit-
uk-f...](https://www.theguardian.com/business/2017/feb/07/brexit-uk-finance-
brussels-thinktank-city-banking-eu-bruegel)

~~~
ZenoArrow
> "Therefore they have no choice but to move the jobs to where the majority of
> the business is and that's no longer Britain."

The majority of business wasn't in Britain before Brexit either, but we still
had businesses based here. If some companies leave, they're just opening up
new opportunities for their competitors. I don't like thinking of people as
'workers' and 'consumers', but let's use those labels for a second. Are you
trying to tell me in a nation of over 60 million consumers, with a high volume
of skilled and hard working workers, that there aren't business opportunities
to be had, regardless of a slow down in exports?

~~~
technofiend
Is there opportunity? Sure. Is there opportunity to replace the salaries and
tax revenue of 30,000-100,000 finance and finance-related jobs lost to brexit
with equally well paying jobs? I am extremely skeptical such a thing is
possible for Britain and until that happens the revenue to Britain's economy
and tax coffers are undeniably lost and cannot be recovered. You are once
again blithely ignoring the fact that brexit directly resulted in finance
companies _moving out of Britain_. There is no backfill by competitors to be
had.

In short brexit with regards to employment in the finance industry is a foot
shooting exercise of epic proportions.

~~~
ZenoArrow
> "Is there opportunity to replace the salaries and tax revenue of
> 30,000-100,000 finance and finance-related jobs lost to brexit with equally
> well paying jobs?"

Two points:

1\. I see over-reliance on any one industry as a weakness. The idea would be
to find constructive uses for the talents of those in the financial industry
elsewhere. There are a diverse range of industries that could benefit from
numerically literate people. To give one example, energy management is going
to be a growing field as we move towards renewables, both in terms of planning
new installations and in balancing the demands on the grid. Is that going to
soak up all of the lost jobs? No, but I wouldn't want it to, otherwise we'd
have another 'too big to fail' industry, the idea is to spread the talent
around.

2\. You point at lost tax revenues, but the financial services industry
appears to be the worst offender when it comes to tax avoidance. I'd much
rather people were employed in jobs where they paid tax, even if their nominal
salaries may be lower.

To give some idea of how bad tax avoidance in the UK financial sector is, and
how much other companies depend on UK-based financial institutions for their
tax avoidance, take a look at the following links:

[http://www.theweek.co.uk/62461/benefit-fraud-v-tax-
evasion-w...](http://www.theweek.co.uk/62461/benefit-fraud-v-tax-evasion-
which-costs-more)

[http://www.taxjustice.net/topics/finance-sector/enablers-
and...](http://www.taxjustice.net/topics/finance-sector/enablers-and-
intermediaries/)

[https://www.youtube.com/watch?v=Hom07yGhg0Q](https://www.youtube.com/watch?v=Hom07yGhg0Q)

Also, to nip the whole 'membership of the EU helps clamp down on tax
avoidance' line in the bud, the EU have known about schemes like the 'Dutch
Sandwich with a Double Irish' for years and haven't put a stop to it, so their
record isn't exactly stellar:

[https://www.irishtimes.com/business/technology/google-
used-d...](https://www.irishtimes.com/business/technology/google-used-double-
irish-dutch-sandwich-to-move-10-7bn-1.2541273)

------
kawera
Seems a bit too early to declare the winner:
[https://www.theguardian.com/business/2017/jul/15/dublin-
firs...](https://www.theguardian.com/business/2017/jul/15/dublin-first-choice-
london-banks-brexit-relocation-plans)

~~~
prodmerc
No matter how you look at it, the UK loses. And most people don't give a fuck,
they think Brexit is over.

~~~
coldtea
> _No matter how you look at it, the UK loses._

Only short term, and only if we just look at first order effects.

In fact, it's too early to tell. Let's check back in 10 years.

~~~
mobiplayer
What makes you think 10 years is not short term? Last crisis, that we're still
recovering and suffering consequences (arguably Brexit is one) from, started 9
years ago.

What makes you think the UK can "win" anything in 10 years if it goes down the
Brexit path? or 20 years for that matter, feel free to move the goal posts
around. I'm curious.

~~~
ZenoArrow
> "Last crisis, that we're still recovering and suffering consequences"

The last crisis was extended by the actions of the government. Quantative
easing to boost the wealth of the private banking sector + austerity in the
public sector.

You can't save your way out of a recession, but if you are going to spend your
way out of it, the money should end up with people who are willing to spend it
in productive ways.

As for Brexit, what's your main economic concern? Imports? Exports? The
domestic market?

~~~
gcb0
every company is already leaving.

IT has the blue collars (cheap engineers, sales, support, it) in Ireland and
they are staying no matter what (zero tax ftw) while all the expensive ppl who
refuses Ireland relocation were in london.

but if London is not EU, now it makes everything too complicated. France
already started to glob startups. Germany got two big fortune 500 and
Switzerland another.

it's a matter of time until they all move. and take all the service cascade
with them.

so if you're afraid of crisis getting worse by fleeing investment, there you
have it.

~~~
ZenoArrow
> "IT has the blue collars (cheap engineers, sales, support, it) in Ireland"

That was the case before Brexit, was it not? Companies like Google and
Facebook had their European headquarters in Ireland before the Brexit
referendum was announced.

> "Germany got two big fortune 500 and Switzerland another."

Interesting that you bring up an example linked to Switzerland, which isn't in
the EU (it's not even part of the EEA). Despite that, it does have access to
the European single market, something that some European bureaucrats are
classing as 'impossible' for the UK post-Brexit. Let's wait and see.

> "it's a matter of time until they all move."

That's what's known as hyperbole. The UK has a large skilled/educated
workforce with a strong work ethic. If incentives are made to mitigate against
downsides of being out of the EU then I don't see every company leaving, and
the ones that do leave will leave behind employees that they helped to train,
ready for a competitor to make the most of.

~~~
renaudg
> Interesting that you bring up an example linked to Switzerland, which isn't
> in the EU (it's not even part of the EEA). Despite that, it does have access
> to the European single market, something that some European bureaucrats are
> classing as 'impossible' for the UK post-Brexit. Let's wait and see.

This is how Switzerland has access to the European single market :

\- It pays into the EU budget

\- It has freedom of movement for EU citizens

\- It implements many EU regulations, without having a say in them.

[http://blogs.lse.ac.uk/brexit/2016/07/20/how-much-do-non-
eu-...](http://blogs.lse.ac.uk/brexit/2016/07/20/how-much-do-non-eu-countries-
give-up-for-access-to-the-single-market-more-than-brexiteers-will-like/)

This has been hammered on and on during the campaign : the UK cannot possibly
end up with a better deal than what it currently has as a full EU member (with
a number of tailor-made opt-outs bordering on unfair to other members, to
boot)

The issue is not with "some European bureaucrats", it is with some British
people having difficulty coming to terms with reality at the moment.

~~~
ZenoArrow
Addressing your three main points:

\- It pays into the EU budget

According to the article you linked to, Switzerland pays far less than the UK
for access to the common market. Time will tell what agreements are reached
here.

\- It has freedom of movement for EU citizens

Which I have no problem with. Oh, did you think that people who voted for
Brexit were racist? Surprise!

\- It implements many EU regulations, without having a say in them.

Again, from the article you linked to, it states that Switzerland has around
100 bilateral agreements with the EU in order to get access to the single
market. Having a multitude of agreements allow a certain level of control over
which EU policies to take on and which ones to avoid. Can read more about
those agreements here:

[http://ec.europa.eu/trade/policy/countries-and-
regions/count...](http://ec.europa.eu/trade/policy/countries-and-
regions/countries/switzerland/)

I do recognise that the bi-lateral deals with Switzerland took years to get
ironed out, and I'm not expecting a quicker turnaround for the UK. What I
predict is that we'll go for some form of soft Brexit where the divorce from
the EU can happen gradually, which would be better for both sides.

------
bitL
I don't think this is entirely true. Paris and Amsterdam are fighting for
banks as well; in Paris all government-related stuff can be now done in
English as well; in Frankfurt for some reason (German pride?) everyone is
forced to use German and frankly learning German is highly non-trivial and a
time-sink. As for Japanese banks, it makes sense; both because Frankfurt has a
significant Japanese minority due to previous business choices and the
mentality is similar as well.

~~~
samsonradu
Got me curious on the German/Japanese mentality being similar, could you
elaborate please?

~~~
strebler
Japan is sort of the Germany of Asia. Both are very detail-oriented people,
well known for craftsmanship, significant amount of global exports, their
trains are always on time, etc.

~~~
ashildr
> trains are always on time

If I would not hold the German black belt in suppressing my emotions I would
have laughed uncontrollably.

(Though compared to the trains in the U.K...)

------
CydeWeys
Having been to Frankfurt a couple months ago, I totally get it. It's
definitely a big banking city, and the logical choice to move to from London.
I was also in Madrid a couple months ago, and it didn't seem like quite as
good of a match as a big financial city.

~~~
collyw
I am curious what makes you think it is a banking city? Banking is pretty much
electronic these days, so location shouldn't matter.

~~~
CydeWeys
Finance as a profession has not really embraced remote work (yet?), so I'm not
sure why you think the fact that parts of the system are electronic matters.
The workers are still collocated in big financial cities, which used to be
London, but seems like it'll be Frankfurt now. As for why it's a banking city,
well, it just feels like it. There's big buildings associated with banks
everywhere, and it has that new building/office park financial sector feel.
Plus there's literally a huge monument to the Euro.

I work in software like most of us, software being absolutely electronic, but
my company hasn't really embraced remote work either, so hence I'm in NYC.

------
Radle
When you are number two and number one gets killed by stupid politics.

Frankfurt may or may not be number one, Frankfurt still profits enormously by
Brexit.

------
krona
I'm not convinced that making finance more expensive produces any winners.

~~~
paganel
Big finance is seen as a systemic risk, and you could say that the EU is just
doing its job in wanting to maintain some level of control over such big and
important of an industry. Many of the banks wouldn't have probably left anyway
(many still might not) if it had looked like the EU and the UK would come to a
sensible arrangement, but lately it seems like the UK politicians in charge of
Brexit are shooting themselves in the foot constantly (the latest example
being B. Johnson and his "they can go whistle" remark).

~~~
mino
> the latest example being B. Johnson and his "they can go whistle" remark

This. No matter how you voted, strategy on the UK side has been a complete
clusterfuck.

------
tankerdude
Wacky. If that is the case, California's GDP could surpass England's.

The exit really is cutting off your nose to spite your face.

~~~
allendoerfer
Sorry to nitpick, but considering that England is not the United Kingdom, it
already is ($ 2.44 trillion for California vs. $ 2 trillion for England in
2015). California also is 4 times as big as England and has only 14 million
fewer inhabitants. California is massive.

------
honestoHeminway
It may sounds naive, but why is the physical location of a bank still relevant
today?

~~~
matt4077
In this case, there are two factors:

\- The European Central Bank (may) insist on certain services only being
offered by banks in their jurisdiction, to avoid becoming dependent on
companies they can't regulate

\- The EU's core principle are the "Four Freedoms": those of capital,
services, products, and labour. They won't allow Britain to pick-and-choose
only the first three.

~~~
coldtea
> _The EU 's core principle are the "Four Freedoms": those of capital,
> services, products, and labour._

So basically all the kinds of freedoms for commerce and employers, and none
for the people ("freedom of labour" being an euphemism for "lesser job
protections").

~~~
jk2323
They say, don't feed the troll. But I will answer you. Likely the EU will have
much higher labor protections that the UK. "freedom of labour" actually means
you are free to move and work or open a business as an EU citizen within the
EU.

~~~
coldtea
> _They say, don 't feed the troll._

They say it, but which part of my comment made you think I don't believe what
I say (which is the necessary condition for it being a "troll")? Not to
mention, that whether you disagree or not, it is a very common criticism
against EUs policies, driven by big capital?

> _Likely the EU will have much higher labor protections that the UK._

Maybe, maybe not, can't speak for the UK.

What I do know for certain is that EU regulations have unmade decades old
worker protections and labor rights in mine (and other) EU countries.

That said, here's what a UK person writes:
[http://www.newstatesman.com/politics/staggers/2016/06/eu-
doe...](http://www.newstatesman.com/politics/staggers/2016/06/eu-doesnt-
protect-workers-rights-it-has-destroyed-them)

~~~
jk2323
I don't know the Newstatesman but it sounds like a very biased magazine.

"This same economics is being inflicted on Britain – cuts and austerity.
Living standards have fallen, wages reduced as a proportion of total economic
output (GDP) and in real terms, and inequality and poverty increasing. " This
actually may be true. And indeed. It could be partly be caused by the EU. Have
a look at the UK's debt:
[http://i.dailymail.co.uk/i/pix/2013/07/19/article-0-1AE4486F...](http://i.dailymail.co.uk/i/pix/2013/07/19/article-0-1AE4486F000005DC-67_634x403.jpg)

The UK had serious problems. Then, under Thatcher, the UK rose again and had
comparably low debt. Some say this is due to Thatcher. I would have said this
at one point, now I say that it was because of oil found in the Northern Sea.
The UK's debt exploded after 2007, also, because the UK had a huge, potential
unhealthy financial sector.

So if you say that the EU is causing the problems in the UK this may be in
fact true, since it allowed "The City" to live unreasonably from grains from
the Financial Industry while some parts of the UK did very badly. I can not
exclude the possibility that loosing a huge chunk of the financial industry
and do a re-balancing may actually a good thing for the average Joe who does
not live in "The City". London voted "stay" by the way.

------
blibble
on one hand the EU is criticising Trump for threatening to institute trade
barriers, whilst it is simultaneously threatening to institute trade barriers
against the UK (unless it pays vast sums of money, and then it's only to begin
talking about a free trade agreement)

can anyone explain why the EU is viewed as some sort of kind, progressive
organisation, when in reality acts like a bitter, protectionist bully?

~~~
jk2323
Touchée. I give you a point here. But there is the Idea of of the four
freedoms for Europe. This may be a good thing or not (I think it is). But If
you are part of Europe, you either take all or none. And if some Brexiters are
claiming "look, we can get the same deal that Japan is getting this year" then
they are delusional. The reason why Japan can get such a deal is because Japan
is not a geographic part of Europe.

There are things that I don't like about the EU. Especially:

* Bureaucracy

* They spent 40% of their budget for agriculture subsidies.

* Now we have open boarders for immigrants from very violent and tribal societies. (You can downvote me for this if you like).

But here are many positive things. Freedom of movement. You can work, retire
or open a business in any EU country that you want. Open skies - very cheap
airfares (which will hurt the UK a lot).

What happens just this year is mind blowing.

* Free trade agreement with Japan

* Potential free trade agreement with Mercosur countries

* No roaming charges for cell phones anymore

* PSD2 for Fintech (Banks have to grant access to bank accounts for fintechs)

* Money Wires are very cheap or free within the EU. They can still take a day or two. Starting November Banks must offer "instant EU money wires". I think the time is less than a minute. Less than a bitcoin transaction takes to process.

* Military Headquarter in the EU, beginning of an EU army

Don't write the EU off. Nobody knows the future but for me the Brexit seems
like madness.

~~~
derriz
Regarding EU bureaucracy, isn't it clear that some is required?

Otherwise how do you replace, for example, 28 different national systems for
classifying bananas with a single classification without a certain amount of
bureaucracy? You either hive massive multilateral discussions among 28
national bureaucracies or you get rid of the individual national burocrats and
delegate this function to Brussels.

I love the bananna thing btw - it's a long time favourite of EU haters as an
example of EU overreach. Europhobic UK newspapers have milked it for years -
out-of-control bureaucrats making up useles regulations and creating red-tape.
But they never mention that it replaced was 28 individual national banana
classifcations.

~~~
matt4077
Note that the "banana regulation" is actually no longer in force, because "EU
bureaucrats" got tired hearing it dragged out in every single debate.

The result is that the content of the regulation have become the de-facto
standard in the industry that everyone is following voluntarily.

~~~
allendoerfer
> The result is that the content of the regulation have become the de-facto
> standard in the industry that everyone is following voluntarily.

It was even the other way round. Lobbyists of merchants wanted cheaper
transport costs and solved it on a EU level.

~~~
matt4077
It was both ways around. The wanted it, got it, then continued using it after
it was no longer official.

