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There was a time when the European Central Bank thought that it could leave its first home — the 40-storey Eurotower — behind it. But after the 2008 financial crisis, the ECB had to take on more than 1,000 extra staff, requiring it to occupy both its new headquarters, which sprang up in 2014, and a refurbished Eurotower.
The question now is whether the ECB, other regulators and indeed the city itself will be able to keep up with an influx of banking activity expected to arrive after Brexit.
It remains too early to tell how many banks will come, but Frankfurt appears to have taken an early lead over rivals such as Paris and Dublin in the race to secure post-Brexit business. The preponderance of supervisors — including the ECB, German authorities and Europe’s insurance regulator — is one of the reasons that Gemany’s financial capital is touted as the obvious candidate to welcome banks that may flee London in the wake of the decision to quit the EU.
The arrival of the ECB in 1998 strengthened Frankfurt’s claim to be the eurozone’s financial hub, and the region is now host to 155 foreign banks. All the large German banks have offices in the city.
The state of Hesse is keen for Frankfurt to take advantage of Brexit, with regional economics minister Tarek Al-Wazir heading delegations to discuss options for banks now in the UK. Those delegations have included officials from the Bundesbank, one of Germany’s banking supervisors, which is also based in Frankfurt.
Yet almost 20 years on from the creation of the ECB, the difference in size between the German city’s financial sector and that of London remains vast. Frankfurt has 75,000 people employed in financial services, London between 400,000 and 700,000 (estimates vary).
While London is a global city, Frankfurt feels like a provincial outpost. To cycle from the Eurotower in the centre to the new headquarters across the city in the Ostend takes 15 minutes — about the same time as a tube journey from Canary Wharf to Bank. In the city itself there are 730,000 people — a figure somewhat behind the population of Leeds.
Areas popular with Frankfurt’s well-paid workers include the Westend — a short walk from the Eurotower and Frankfurt’s other skyscrapers — or out in the Taunus, suburban towns to the north of the city by the hills of the same name. While prices in the Westend have grown quickly in recent years as more and more Germans opt for city living, new builds on the outskirts of town could accommodate an expanding financial sector.
“There are a lot of developments in the residential Taunus — and at prices that are not affordable for everyone — so we hope the bankers with the money will come,” says Sven Carstensen, head of the Frankfurt office of property researchers Bulwiengesa.
Mr Carstensen thinks that one of the city’s advantages is that there is more than enough office space for the estimated 10,000 financiers that the city’s chief post-Brexit lobbyist expects to arrive.
“There is some space in the fringes of the city and there are a lot of new developments planned. If a bank really wanted to change location, there would be an interim solution of locating on the outskirts and then moving within the city later on.”
One problem could be educating the children of the new arrivals. While the region has schools offering qualifications such as the International Baccalaureate, some are already oversubscribed.
In some quarters there is scepticism about how big the boost from Brexit will prove to be. Unlike London, which provides a host of different financial services, activity in Frankfurt is focused on banking. Some think that is likely to remain the case.
“London has diversity, talent pools, the clarity of common law. Frankfurt is at heart a banking centre, it’s not an asset management centre, it’s not an insurance sector. It just happens to be home of Germany’s largest banks,” said Michael Mainelli, chair of Z/Yen Group, a think-tank.
But there is one particular factor standing against London. Mr Mainelli believes that a licence to operate in Germany, and therefore in the rest of the EU, is most attractive to banks from outside Europe who need an outpost for their operations in the region. “If you were a Brazilian or a Chinese bank, would you want to negotiate 27 bilateral agreements to do business in Europe or negotiate one?” he says.