• Germany's news in English

'Frankfurt weathers euro crisis better than rivals'

The Local · 26 May 2013, 12:00

Published: 26 May 2013 12:00 GMT+02:00

Facebook Twitter Google+ reddit

Although the epicentre of the euro, Europe's single currency, there is a long list of things Frankfurt is not. With just 700,000 inhabitants, this compact German city – often referred to as the world's smallest metropolis – can't compete in size to other financial centres, such as London, Tokyo or New York.

In fact, on the Global Financial Centres Index, it ranks only 10th in the world and fourth in Europe behind London, Zurich and Geneva. It isn't a capital city either, not even of the central regional state of Hesse where it is based.

Although home to more than 300 banks, both national and international, it isn't Germany's wealthiest city, even if – with its ever-growing skyline of gleaming steel and concrete skyscrapers – it likes to style itself as "Mainhattan", a play on the name of the river on which it is built.


In terms of household income, Frankfurt is Germany's 23rd richest city, behind Hamburg and Munich and even the likes of Stuttgart, Düsseldorf, Cologne and Bonn.

Greater Frankfurt ranks third behind Munich and Hamburg in terms of gross domestic product (GDP) per capita. It is home to the once-mighty Bundesbank and now the European Central Bank,

and also hosts Deutsche Börse, Europe's second-biggest stock exchange after London.

Despite the competition however, Frankfurt has fared much better than all other European financial and banking centres during the region's long and debilitating debt crisis. The German economy, too, has weathered the crisis storms much better than its eurozone neighbours and its blue-chip stock index, the DAX, has recently soared to new all-time highs.

While the challenges are the same – an economic slowdown in the euro area, an environment of ultra-low interest rates and profound restructuring of Europe's banking sector – analysts say Frankfurt has a number of advantages.

London's City axed more than 30 percent of the workforce in its banking and financial sector between 2007 and 2012 to 249,000, according to data compiled by the Centre for Economics and Business Research (CEBR).

And more than 13,000 more jobs are facing the chop by the end of next year, bringing the number of people employed in the sector to its lowest level since 1993.

No 'blood-letting'

By contrast, a study by German regional bank Helaba calculated that just 3,000 jobs have been lost in Frankfurt since the 2008 collapse of Lehman Brothers and the number of people employed in the sector is projected to fall by just 2.0 percent to 73,000 people at the end of next year.

"Frankfurt is doing well as a financial centre," said Lutz Rättig, spokesman for Frankfurt Main Finance, a financial sector lobby group, and supervisory board chief for Morgan Stanley in Germany.

"The climate has deteriorated somewhat as a result of the financial crisis, but there's been no downturn. Frankfurt's banks haven't had to cope with the dramatic blood-letting that we've seen in London or Paris," Rättig said.

Christoph Schalast, professor at the Frankfurt School of Finance & Management, argues that unlike other European financial centres, Frankfurt has never been a major player in investment banking, which is at the root of the crisis.

On the contrary, Germany's banking sector is largely centred on credit and savings, and entertains close ties to the small and medium-sized enterprises, or SMEs, that form the main backbone of the country's economy, Schalast said.

Story continues below…

"There is a close link with the real economy which is absent from other financial centres," said Rättig. "The excesses seen elsewhere have not been seen here."

Foreign banks are also drawn to the established financial centre of Frankfurt because "Germany's federal structure isn't always easy to understand," said Schalast.

"Thus when they consider setting up a branch in Germany, it's Frankfurt they'll choose because of the presence there of the Bundesbank, the ECB and Deutsche Börse," he argued. With the ECB now also to become responsible for banking supervision across the euro area, Frankfurt's importance might grow still further.

A referendum vote on Britain's place in the EU, as promised by Prime Minister David Cameron, could also prove decisive. But Schalast reckons that it is unlikely the city can de-throne London as Europe's financial capital any time in the foreseeable future.


The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German town, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

Student fined for spying on women via their webcams
Photo: DPA

Student from Munich fined €1,000 for spying on 32 different computers, using their webcams to take photographs, or record their keyboard history.

This is how much startup geeks earn in Germany
Photo: DPA

A comprehensive new survey of 143 startup founders shows how much you are likely to be earning at a German startup, from entry level all the way up to sitting on the board.

Man dies after beating for peeing near Freiburg church
The Johannes Church in Freiburg. Photo Jörgens Mi/Wikipedia

A middle-aged man from southern Germany has died after being attacked by a group of men who took umbrage with the fact he was urinating in the vicinity of a church.

The Local List
Seven German celebrities with uncanny doppelgängers
Former Berlin mayor Klaus Wowereit and actor Alec Baldwin. Photo: DPA; Gage Skidmore, Wikimedia Commons

Check out these seven look-a-likes of well known German figures - we admit that some are more tenuous than others...

Israel seeks to buy three new German submarines: report
A Dolphin class submarine. Photo: DPA

Israel is seeking to buy three more advanced submarines from Germany at a combined price of €1.2 billion, an Israeli newspaper reported Friday.

Here’s where people live the longest in Germany
Photo: DPA

Germans down south seem to know the secret to a long life.

More Germans identify as LGBT than in rest of Europe
Photo: DPA

The percentage of the German population which identifies as lesbian, gay, bisexual or transgender is higher than anywhere else in Europe, according to a new study.

'Reichsbürger' pair attack police in Saxony-Anhalt
File photo: DPA.

A "Reichsbürger" and his wife attacked police officers on Thursday, just a day after another Reichsbürger fatally shot an officer in Bavaria.

Five things not to miss at the Frankfurt Book Fair
Photo: DPA

From consulting a book doctor to immersing yourself in an author's world with the help of virtual reality, here are five things not to miss at this week's Frankfurt Book Fair, the world's largest publishing event.

Sponsored Article
How to vote absentee from abroad in the US elections
10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
Sponsored Article
How to vote absentee from abroad in the US elections
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd