“For the first time in this Top Ten”: Eric Menges, President and CEO of FrankfurtRheinMain GmbH International Marketing of the Region, explains in an interview what impact Brexit has for the region – and how Frankfurt as a financial hub has benefited.
Mr Menges, Brexit has now happened so time to take stock. Has Frankfurt as a financial centre benefited from the EU exit? You can read all manner of different figures in the media …
In principle, it is always difficult to seek to derive a benefit from a negative occurrence. However, below the line we can say that Frankfurt as a financial centre has clearly profited from Brexit. In early March, the Z/Yen Group, a leading London-based financial sector thinktank, published the list of the world’s predominant financial centres. For the first time, Frankfurt placed in the Top Ten in this ranking. This is specifically note worthy as Z/Yen studied 126 financial centres all over the world the world over in line with criteria such as infrastructure, rule of law, availability of qualified personnel, and quality of life. According to the study, Frankfurt was for the first time classified as the most important financial centre in Continental Europe. And incidentally: This achievement means we have for the first time left our strongest rivals on the Continent – Luxembourg, Paris and Zurich – behind us.
As regards the actual figures: According to BaFin, the German Federal Financial Supervisory Authority, since 2016 no less than about 60 financial institutes and insurance groups have applied for a licence to operate in Germany. The lion’s share of them have chosen Frankfurt as the base for their new European headquarters. In this way, countless jobs have of course been created in the region. Major names, including Morgan Stanley, Standard Chartered, Goldman Sachs, JP Morgan, Citi, Daiwa Securities, Nomura Holdings, and Mizuho Financial Group, to name but a few, have all expanded their subsidiaries in Frankfurt in recent years, relocated here, or moved their European head offices from London to Frankfurt.
Word has it that other companies have moved to FrankfurtRheinMain in connection with Brexit. Could you give us an idea of the numbers and the sectors involved?
In the last few years, we have supported more than 20 major corporations in the fields of logistics, chemicals, pharmaceuticals, the Life Sciences, IT, consulting and tourism in locating to FrankfurtRheinMain. Amongst them Activpayroll, a global specialist for salary payments and accounting that comes from Aberdeen in Scotland and which has opened a branch in Kelsterbach in the Groß-Gerau. As a service provider, it works for more than 1,000 corporations in over 140 countries the world over.
Technology consultants d-Wise Technologies, which supplies life science and healthcare corporations with clinical software and offers product and consultancy solutions, has moved to our region as a result of Brexit. d-Wise was founded 18 years ago in North Carolina and is now one of the fastest growing companies there.
Fundamentally, it clear that companies prefer to shift staff and projects from the UK to Europe rather silently in order not to impair their reputation and client base in Great Britain. We nevertheless know that these moves are taking place.
What factors helped the Frankfurt RheinMain region win against competition? Was it hard facts? Or did it score thanks to its soft skills, too?
Frankfurt RheinMain is in competition with big cities such as Paris, Dublin and Amsterdam. Now it is always difficult to compare individual cities. Countless hard facts speak in our favour. In the financial sector we have a superb international eco-system, with countless banks, consultants, legal experts, universities, start-ups and regulators such as the ECB, the German Bundesbank and BaFin. Needless to say, it is all a little smaller than in London, but we offer excellent and attractive conditions all the same. In other fields, such as the ICT, automobile and life science sectors, Frankfurt RheinMain also boasts major and competence global expertise.
There are also countless soft factors where the region does incredibly well. There is the fact that everything is so close at hand. International families are constantly astonished that they can reach everything within 30 minutes: the vineyards in the Rheingau and Rheinhessen, the beergardens along the banks of the Main in Bavaria, a golf course in the Main-Kinzig district, the forests of the Spessart and the Odenwald, and the Wetterau’s rolling countryside. This means quality of life is first class. Travel times such as those in Paris or London, where many staff have to commute an hour or more to work in the morning and the whole way back in the evening, is simply unknown here. And that’s also a real money saver, too.
Another key factor is the region’s often-cited Internationality. We in Frankfurt RheinMain have for many years before Brexit already hosted countless internationally experienced financial service providers, auditors, law firms and accountants. Here you’ll find outstandingly well-trained English-speaking staff in all industry sectors and across all the different hierarchies. Our trade fair has been welcoming international businesspeople to the region since the 12th century. Added to which, the 30 international schools in the region are a major factor – 12 of them offer an International Baccalaureate which grants access to universities anywhere in the world.
Have there been any bitter pills, such as restrictions to trade with Great Britain?
Essentially for an international hub such as Frankfurt RheinMain the introduction of trade barriers is always bad news. Many companies in the region have been hard hit by Brexit. Firstly, there are many long-standing relationships with companies in the United Kingdom, and secondly the financial centres of London and Frankfurt have had close links for decades now. With Great Britain’s exit from the EU a uniform European financial market is now sadly a thing of the past. Primarily it is neither Continental Europe nor London that have really benefited – but instead New York. For start-ups, further segmentation within Europe is anything but ideal, if it becomes ever harder to scale up business models.
For companies in the region that have business connections to companies in the UK, since 1 January there have been new customs regulations, and importation and customs declarations have become necessary. That in turn leads to delays and risks in supply chains that no one can really assess in advance. In particular, it is SMEs that are facing greater cost and effort as a consequence. I do believe, however, that we have managed to constrain Brexit’s negative impact on the economy of our region. Most companies in FrankfurtRheinMain are very diversified internationally speaking and that means while they are feeling the impact they are not suffering too much from it. All things considered, it is safe to say that the Frankfurt RheinMain region is the best and most uncomplicated location for corporations wishing to maintain or grow their client base in the 27 EU member states. To put it in the words of the financial world: We offer companies a truly “soft landing” in Europe.