Why global banks are ditching London for Frankfurt

Some of the globe's biggest banks have decided to rent more office space in Frankfurt, bolstering Germany's financial hub after months of divorce talks between Britain and the EU have left London's future more uncertain than ever.

Goldman Sachs has agreed to lease 10,000 square metres of office space at the new Marienturm building in Frankfurt, making it one of the city's biggest wins since Brexit.

It will take the eight top floors of a new 37-storey tower now being built, giving it space for up to 1,000 staff, according to a person familiar with the matter.

That would be five times the current staff of 200 and see the Wall Street giant bolstering activities including trading, investment banking and asset management. A spokesman said it gave "space to execute on our Brexit contingency plan".

Morgan Stanley has also signed a lease for offices in a tower, the Omniturm, that is also now being built. It has 200 staff in Frankfurt and expects to double that number, said one person familiar with the plans. The bank declined to comment.

JPMorgan is also considering renting two additional floors on top of the five it now occupies at a high-rise tower in the centre of town, said a person familiar with the plans. The bank, which currently has 450 staff in Frankfurt, declined to comment.

Citi has said it will build its Frankfurt operations by adding 150 staff. It plans to expand inside its current building dubbed Welle, near Frankfurt's opera house. The expansion is the result of growing nervousness about the future of London's financial centre amid slow and acrimonious negotiations between Britain's Brexit minister David Davis and his opposite number at the European Commission, Michel Barnier.

Underscoring the confusion, British Prime Minister Theresa May made a calamitous keynote speech on Wednesday, interrupted by coughing fits, a prankster and letters of a slogan falling off her stage backdrop.

Although some politicians in Britain are sceptical banks will follow through by moving large numbers of jobs, bankers in the City of London financial hub see an urgent need to act.

The stakes are high. Financial services are Britain's biggest tax and export generator.

Once Britain leaves the EU - planned for March 2019 - banks in London could find it harder to do business within the bloc, prompting many to seek a foothold such as Frankfurt.

The British government has said it would like a transition deal to smooth the way for business, but a top Bank of England official said on Wednesday that would probably need to be agreed by Christmas to prevent jobs from seeping abroad.

Top German politicians have courted banks ever since the Brexit vote, persuading many to move there because Europe's biggest economy proved unshakeable during the financial crash.

A recent study commissioned by Frankfurt's chief promoter predicted there would be 10,000 new bankers in the city within four years and that their arrival could create tens of thousands of additional jobs, from estate agents to building workers.

The migration is already buoying interest in a city, known for 'Frankfurter' sausages and cider. The prices of new luxury flats in the city jumped by 25 per cent within a year, according to data released in August.

Source: Khaleej Times