Frankfurt Waiving Strict Labor Laws for Prospective Lenders Leaving UK

The battle to become the EU’s next financial Hub Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method Read this Term post-Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term is currently unfolding, with Dublin and Frankfurt positioning themselves in a two-horse race. Just one week after a tranche of banks and asset managers were said to be signing deals to relocate to Dublin, Frankfurt has resorted to waiving rigid labor laws as a further means of attracting lenders.

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Last month, Nomura and Daiwa Securities Group became the first major lenders to solidify their plans to relocate their EU base of operations to Frankfurt. The decision ended months of contemplation that saw banks opting for a wait-and-see approach in regard to the severity of the eventual Brexit. Plans were ultimately put in motion following UK PM Theresa May’s harsh rhetoric of suspending passporting rights in the UK.

Frankfurt boasts a number of advantages for incoming and prospective banks, namely its geostrategic location in the heart of the bloc. In addition to a talented labor pool, the city is an economic powerhouse despite low rental costs, relative to its competition. However, the city faces one key issue - a dearth of available office space as many other groups have since gravitated towards the city.

Revision of labor laws opening up doors

In its latest bid to secure prospective lenders, Frankfurt is sweetening the deal by exempting specific components of its labor laws – more specifically, labor laws in Germany mandate big payouts for redundancies and make it more difficult to fire personnel. These aspects had proven problematic to many banks, especially given the nature of the industry presently. Perhaps no sector has seen higher turnover in recent years than the banking space, with thousands of job cuts.

However, in a bid to placate skeptical banks, Frankfurt has now doubled down on its incentives. Initially, proposals were floated to exempt only high earning banks from these rules, a stance that has now been extended to entire banking personnel structures, or more aptly put ‘risk takers’.

Still, the patchwork solution is not a dealbreaker, with many banks still exercising skepticism over its implementation and longevity. Nonetheless the move is quite timely as many banks are simply on the fence about where to relocate to, with many looking to Frankfurt, Dublin, Amsterdam, Paris, Luxembourg, and others.

Last month, as many as twelve banks and asset managers operating in the UK had signed deals to relocate to Dublin. Many of these groups have already begun procuring banking licenses, real estate space, trading floors, and other measures. According to Ireland’s Development Authority (IDA), the group had fielded as many as eighty inquiries over the past year regarding relocation to the Irish capital.