Bank Relocations

London’s Loss May Be Frankfurt’s Gain

ARCHIV - Das Schild einer Commerzbank-Filiale mit dem Logo hängt unweit der Zentrale der Commerzbank in Frankfurt am Main, aufgenommen am 21.08.2010. Die Commerzbank präsentiert am 02.11.2015 die Zahlen für das 3. Quartal 2015. Foto: Arne Dedert/dpa +++(c) dpa - Bildfunk+++
Frankfurt could get some London charm.
  • Why it matters

    Why it matters

    London could lose some of its big banks — and its status as Europe’s financial capital — if Britain votes to leave the European Union.

  • Facts

    Facts

    • British Prime Minister David Cameron this week called for broad changes to the European Union to keep Britain in the 28-nation bloc.
    • Britain derives about 17 percent of its economic output from financial services, which are based primarily in London, according to Standard & Poor’s.
    • Frankfurt is home to the European Central Bank, but the introduction of the euro hasn’t attracted as many foreign banks as expected.
  • Audio

    Audio

  • Pdf

With Britain due to hold a referendum by 2017 on whether to leave the European Union, many businesses in Germany are warning of disaster and the loss of a key export market. The German financial capital Frankfurt, however, is looking at the possibility of a Brexit with a sly smile on its face.

If banks choose to vote with their feet, London’s loss could be Frankfurt’s gain.

It’s a mouthwatering prospect for Germany’s sleepy financial capital that has long had designs on becoming something greater – a European heavyweight that could dislodge London as the biggest financial center on the continent.

The hopes began with the arrival of the euro, a common currency for 11 countries initially, now for 19.

Britain opted to stay out of the European currency project, keeping the pound, and Germany won a battle with France to host the euro zone’s new central bank. The European Central Bank set up shop along the Main River in a shiny new office tower on the edge of Frankfurt in a run-down neighborhood.

Alexander Radwan, a member of the Bundestag with Germany’s Christian Democratic party, remembers the expectations surrounding Europe’s biggest unifying project. Frankfurt or maybe Paris, it was hoped, could eventually replace London as the biggest financial capital in Europe.

“We believed at the time that the strongest European financial center should be in the euro zone,” Mr. Radwan, who serves on the parliament’s finance committee, told Handelsblatt Global Edition.

But many have falsely warned of London’s imminent demise as Europe’s finance capital. And so it is with a healthy degree of skepticism that Mr. Radwan eyes the current debate surrounding “Brexit.”

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.