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The world’s smallest global city: how Frankfurt is selling itself to Brexit bankers

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The world’s smallest global city: how Frankfurt is selling itself to Brexit bankers
Frankfurt town hall with skyscrapers in the background. Photo: Jörg Luyken
12:46 CEST+02:00
Germany’s financial capital will be presented a once-in-a-lifetime opportunity when London and its financial institutions leave the EU next year. But the city on the Main has its work cut out convincing top talent that it is a desirable place to come to.

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On the 22nd floor of one of the glass towers that thrusts into the sky above downtown Frankfurt, a Brazilian musician is sat with his guitar in the corner of a cocktail bar, singing Seu Jorge love songs.

At a table next to the windowed wall, a middle-aged man browses his phone while waiting for his younger wife - thick blond hair and gold stilettos - to arrive. Two young men order whiskeys at the bar before taking selfies with the “Mainhattan” skyline as their background. A pair of businesswomen laugh tipsily behind them.

This bar is one of the favoured hangouts of the banking elite of Frankfurt. It offers panoramic views of the only German city where skyscrapers fight for attention alongside a medieval town hall and 19th century villas. And the view can be enjoyed with a beer for €6 or a bottle of champagne for €660.

But on a Thursday evening in April the bar isn’t exactly buzzing. When the guitarist finishes for the evening, the dozen or so patrons appear not to notice. The men at the bar take another selfie. The businesswomen have spotted a rooftop party a hundred metres below and are putting on their coats.

‘We like to party’

As Frankfurt attempts to persuade international banks to choose the city for their European headquarters after London leaves the EU, one of the major roadblocks that it is coming up against is its image as a sleepy provincial town.

In the gossip columns of financial newspapers, the city of 730,000 people is referred to as “Yawn-furt”. Even Deutsche Bank, which is headquartered on the banks of the Main, is reportedly struggling to find enough bankers prepared to leave the bright lights of London for the leafy, middle-class comforts of one of Germany's wealthiest regions.

Frankfurt Main Finance, a lobby group which is leading the push to transform Frankfurt into the new financial capital of Europe, has thus taken up the fight to win the hearts and minds of London bankers.

When bank delegations arrive in the city to scope it out, Hubertus Väth, the chief lobbyist at the organization, is the one waiting to show them a good time.

“Really, we like to have a party and we look for any excuse,” he says, sitting at a conference table in the organization's office on the south side of the Main.

“Taxes and other considerations are critical when banks make their decisions [on where to move], but the lifestyle has to be okay to get the talent here,” Väth explains.

A view of the Frankfurt skyline. Photo: DPA

While he concedes that the city's image problem is making it harder for banks to convince employees to relocate, he blames this on “a lot of utter nonsense that is written about Frankfurt. Apparently we only just discovered what good coffee is. Oh, and you can’t get a beer here either.”

The reality, Väth insists, is very different.

“There is not a single thing people tell me we don’t have, that I can’t prove that we have - not a single thing,” he says, before listing an English-language theatre, street markets and a football club “with one of the three or four best stadiums in the country.”

“But we’re not London and we’re not even close to London, because London is one of a kind. We are not pretending to be London.”

As banks make contingency plans for Britain leaving the EU in March 2019, Frankfurt doesn’t need to be as good as London though - it just needs to be better than the alternatives still inside the EU.

If the traders have been slow to come round to the idea, the banks seem to have been more receptive to Frankfurt's pitch. So far, somewhere between 14 and 19 banks have committed to moving their European headquarters to the Main, a fact that has instilled quiet confidence in the German financial sector.

While Amsterdam is winning the race from the point of view of pure numbers, Väth contends that it is about quality, not quantity. “Among the banks moving here are four out of the five big US banks, four out of the five big Japanese banks," he says.

Nonetheless, the lobbyists have back-pedaled somewhat on their bolder claims about what Brexit could do for Frankfurt.

After the Brexit vote, Frankfurt Main Finance commissioned a study which came to the conclusion that up to 100,000 new jobs would be created in Frankfurt after Britain exits the EU. The study, released last August, predicted that an initial "Brexit shock" would bring 10,000 banking jobs to the Main and that at least another 21,300 non-banking jobs would be created as a knock-on effect.

Recently though Reuters offered a more sober analysis, saying that an initial 5,000 financial jobs would come to Frankfurt, a figure Väth now describes as “pretty accurate.” The figure of 10,000 new banking jobs is “an upper limit, it’s doable but not a given,” he adds.

'Missing the atmosphere'

While there has been a flurry of attention around Frankfurt over the past two years, the city can hardly be described as a newcomer on the financial scene.

After the German Central Bank chose the Hessian city for its headquarters in the 1950s, many private banks followed suit. And in 1998 the European Central Bank also moved to the city, ensuring the city's importance as a continental financial centre.

Meanwhile, Frankfurt’s place as a centre of international trade dates back to the 13th century, when the first trade fair was held in the city. That tradition never stopped and the city now has the world's largest trade fair, with grounds that swallow up a large chunk of the west of town.

The money that started flooding into the city long before Brexit ever happened is made clear by taking a walk through the Nordend district. Once a notorious centre of anti-capitalist agitation, the district is now a luxury residential area, where tantra retreats are housed in carefully restored town houses.

"People approach me asking if they can find an apartment in Frankfurt for €600 and I tell them to forget about it, they're better off looking in Wiesbaden," Oliver Matthews, a Brit who has lived in Frankfurt for four years, tells The Local.

Photo: DPA

A lot has changed in recent years, says Matthews, who works at the Frankfurt School of Finance & Management.

He first visited the city ten years ago for work and "it wasn't a place I would have wanted to live in." The town centre was drab and at night the streets often felt dangerous.

Now though projects like the regeneration of the waterfront have given the city a much more cosmopolitan feel. And, as Matthews points out, the rising rents are still very affordable for someone on a banker's salary.

“There are very few financial capitals in the world with such low commuting times,” he says, "you can get wherever you need to in the city on foot." He says that he wouldn't swap the leafy, idyllic German city for the crowds and chaos of London.

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He also describes though how bankers who have moved to Frankfurt from London "miss the atmosphere of the London banking culture, the jokes in the office and drinks after work on Fridays.”

And in the ego-driven world of investment banking "London has a prestige that attracts people."

'Frankfurt is ready'

At the head of the city's push for banks to move from London is Eric Menges, CEO of FrankfurtRheinMain GmbH, the state company responsible for marketing the region to the world.

Since the Brexit vote, one of the main tasks of FrankfurtRheinMain has been to convince banks Frankfurt is "the best alternative" and then to help them through the paperwork.

Visitors to the state company's office have to travel 20 minutes out of the city to a glass tower overlooking Frankfurt Airport. The office's reception area gives a front row view as huge airliners take off with clockwork regularity from Europe's fourth largest air hub.

“We have one of the largest and most efficient global airports which lies right next to the city," says Menges, a Frankfurt native who speaks English with an Australian accent. “You can be in downtown Frankfurt in 15 to 20 minutes. You can be anywhere within the greater Rhine-Main region, with 5.5 million people, within 20 minutes. So it makes it very attractive to put a European operation somewhere in the region.”

Frankfurt itself is “a fully functional financial services ecosystem, albeit on a much smaller scale than London. Everything is there - smaller but fully operational,” is how the CEO makes his pitch.

Menges insists though that he isn't counting the number of bankers coming to Frankfurt - he even says he doesn't expect large numbers of traders to have to relocate.

“Some of these jobs will also be filled locally, it is not as simple as bankers packing up boxes in London - I don’t think that is going to happen.”

Photo: DPA

He is also keen to downplay the importance of Brexit for Frankfurt's future, contending that the city has been on a steady upward trajectory for well over a decade.

“Since 2005 we attract on average 80 to 90 new companies to the Frankfurt Main Rhine region [a year]. People often believe that because of Brexit Frankfurt will suddenly have to deal with all these international companies. Without Brexit a whole range of companies have come to the area."

He points out that the dismissal of Frankfurt as a "small" city neglects the fact that the Deutsche Börse is in Eschborn and big insurance firms are based in Wiesbaden, both satellite cities of the finance hub.

The growth that is already taking place in the Rhine-Main region, which has a GDP roughly the size of Ireland's, also means it is ready for a Brexit boost, he says.

“The growth that will come out of Brexit? I’m positive we are ideally positioned to handle it. International schools? Free capacity at the moment and we are already talking about expansions.”

“Office space is no issue. There is (currently) a vacancy of one million square metres - not all of that would be suitable to accommodate financial institutions, but 50 percent of that easily. On top of that another 200,000 square metres are coming on line over the next 24 months - brand new and right in the middle of the city.”

And he is adamant that the city has a culture that suits the jet-set banker class. “If you look at Germany, Frankfurt is by far the most international place in all of the country," he says.

While this assertion might raise eyebrows in Berlin, statistics show that over half of Frankfurters have a migration background.

Lobbyist Väth has a similar take on it: “People want to live in a global city, but also have the village feeling that makes Frankfurt so special. That's why I keep calling it the smallest global city in the world.”

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