EBA move

Bank Watchdog Waltzes Towards Vienna

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Definitely not Frankfurt. Source: Pixabay

The financial capital Frankfurt has its detractors. Some say its greatest asset is its airport and turn up their noses at its rustic culinary delicacies: sour-milk hand-formed cheese and a green sauce that’s just a bit too luminous to be appetizing. Oh, and apple wine…

It does have its attractions though. For instance, in the quaint district of Sachsenhausen, there’s a cobble-stoned area of bars and restaurants where a statue spits water at passers-by. Culture, however, is not a strong point. Most sights were leveled by World War II bombing, replaced today by a striking clutch of skyscrapers that have earned the city the epithet “Mainhattan,” in reference to its river, the Main.

Ultimately, Frankfurt is a wealthy, hard-working town populated with financial professionals. Arguably, that’s about all there is to say about it.

Compare that with the old-world charm of Vienna, with the imperial majesty of its architecture, its world-famous palaces and parks and cafes and cake, and it’s easy to understand why the Austrian capital appears to be ahead in the race to host the European Banking Authority. Currently based in London, the powerful watchdog is looking for a new home in the European Union ahead of Britain’s exit from the bloc in March, 2019.

Vienna is scoring points for its quality of life.

EU diplomats told Handelsblatt that Frankfurt’s application to host the regulatory authority was good, but that Vienna had a better chance of getting it.

Eight cities have submitted bids to the European Commission, the others being Luxembourg, Paris, Dublin, Brussels, Warsaw and Prague. It will announce its assessment of the applications on Saturday. Foreign ministers from the member states will pick the winner on November 14.

Vienna is scoring points for its quality of life. It has topped the annual Mercer ranking of the world’s most attractive cities for the last eight years. Frankfurt made it to 7th place in 2017. The ranking is closely studied by international companies seeking locations.

Outgoing German Finance Minister Wolfgang Schäuble, who has lobbied hard for Frankfurt, has waxed lyrical about it, praising its location “in the heart of Europe,” its dense network of financial institutions and “rich cultural scene.”

“This combination of key factors makes Frankfurt the best option,” Mr. Schäuble said in the German application for the EBA.

The Commission wants to make sure that the EBA’s staff feel happy in their new home. President Jean-Claude Juncker said its employees shouldn’t be pushed around like chess figures and that their wishes should be respected. On that basis, Warsaw and Prague are believed to be out of the running as cities in central and eastern Europe are said to be unpopular among EU officials.

The Commission’s assessment is based on the following criteria: the quality of available office space, transport infrastructure, international schools, healthcare and employment opportunities for the partners of EBA staff, and the “geographical balance,” meaning that countries that already have major EU institutions shouldn’t get any more.

That reduces the chances of several contenders, especially Brussels and Luxemburg, home to countless EU bodies. Luxembourg is even claiming a 1965 EU treaty stipulates that EU finance institutions must be based in the Grand Duchy.

And Paris already has the powerful European Securities and Markets Authority (ESMA), while Germany is home to the European Insurance and Occupational Pensions Authority (EIOPA), and the European Aviation Safety Agency, not to mention the European Central Bank. Austria, by contrast, has only the relatively small European Union Agency for Fundamental Rights — a further argument in its favor.

However, Frankfurt has an ace up its sleeve. Germany’s banks see it as the most suitable location. “As the seat of European institutions such as the ECB as well as many international banks, Frankfurt is already one of the leading financial centers in Europe,” Michael Kemmer, managing director of the Association of German Banks, told Handelsblatt.

Hubertus Väth, director of the lobby group Frankfurt Main Finance, said Frankfurt would become the EU’s leading financial center after Brexit. “So the logically consistent choice based on objective criteria can only be Frankfurt.”

If only it weren’t for the green sauce.

 

Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. Andreas Kröner is a finance correspondent at Handelsblatt. To contact the authors: berschens@handelsblatt.com, kroener@handelsblatt.com

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