Deutsche Bank is planning to shift large parts of its trading and investment-banking business from London to Frankfurt, Bloomberg reported on Thursday.
According to information obtained by people familiar with the matter, Deutsche Bank will implement the change within the next 18 months, making it the most recent bank moving operations from London to the German financial hub in the wake of Brexit.
Deutsche Bank is already headquartered in Frankfurt. In the future, the lender intends to run more of its trading and investment banking operations, alongside clearing-, risk management-, legal- and reporting divisions from the city.As a result, hundreds of staff and up to 20,000 client accounts would be transferred to Germany.
The plans could still change depending on the precise outcome of the Brexit negotiations.
Following Britain's decision to leave the European Union in June 2016, financial institutions based in the country are worried about losing access to the Single Market.
The British financial services lobby group TheCityUK estimates that 70,000 jobs could be lost in the industry if Britain does not remain in the single market, while London Stock Exchange Chief Xavier Rolet put the figure as high as 270,000 in the event of a loss of euro-clearing activities.
So far, lenders including Goldman Sachs and UBS, and the Japanese banks like Nomura, Daiwa have announced plans to open new offices in Frankfurt, making the German city the leading competitor ahead of rivals Paris and Dublin.
The lobby group Frankfurt Main Finance reported that as many as 20 banking institutions were currently set on expanding or creating new corporate entities in Frankfurt. Part of the city's attraction lies in the circumstance that it is also home to the regulatory bodies of the European Central Bank, German Central Bank and the German Federal Financial Supervisory Authority (BaFin).
Deutsche Bank would reportedly move an additional 2,000 staff to Frankfurt, should it be forced to book all transactions with continental European clients within the EU after Britain leaves the bloc. Bloomberg cited a representative at a London investment firm which manages Deutsche Bank bonds and shares as stating, "It's another milestone in what we call the Brexodus...Every single continental European bank is working on plans to repatriate their trading and plumbing..."
Officials in Frankfurt are seeking to further strengthen Frankfurt's lure over that of its EU competitors by offering bankers engaged in high-risk activities the exemptions from Germany's strict labor code.
"Banking regulation explicitly defines the risk bearers in such institutions, which provides an ideal starting point. The government of the State of Hesse anticipates that relevant legal changes may be possible following the German parliamentary elections this September, at the latest by autumn 2018."Thomas Schaefer, minister of finance in Frankfurt's home state of Hesse, told the Financial Times.
Around 9,000 of Deutsche Bank's 98,000 global staff are based in London. According to its representatives, nearly half of its British workforce could be at risk of redundancy or transfers, depending on the final shape of Britain's relationship with the European Union. The Bank's representatives declined to comment on Thursday's press reports.
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