As the Brexit clock continues ticking, banks are continuing to make quiet preparations for the day when they may have to locate some of their activities in continental Europe.
Goldman Sachs, for example, just moved Thomas Degn-Petersen to Frankfurt as a managing director and the head of the “Federation” (its middle and back office activities) in Germany. A German-speaking Dane, Petersen joined Goldman as an analyst in 1997 and was made an MD in 2009. Before arriving in Frankfurt last month he spent nearly four years working for Goldman in India, where he was co-head of controllers and global head of shared services. Goldman is building a new $250m campus in Bangalore for 2019, and hiring up to 9,000 people there.
Petersen is unlikely to be as busy hiring in Frankfurt as in Bangalore, but his arrival reflects Goldman’s commitment to the German city. The firm reportedly alerted around 12 London sales and trading staff of their impending move to Frankfurt in February and Joerg Kukies, the then-head of Goldman’s German office who subsequently left to become Germany’s deputy finance minister, said in March that the firm was starting to “build infrastructure” and move senior people. Last October, Goldman leased additional office space in Frankfurt in preparation for Brexit-related expansion there. Goldman Sachs currently has 17 vacancies in Frankfurt, most of them in the middle office.
While Goldman is quietly laying the foundations for its future in Germany, Stefan Winter, the head of investment banking at UBS Europe SE in Frankfurt and head of the Association of Foreign Banks in Germany, tells us he’s still expecting 3,000 to 5,000 jobs to move to Frankfurt in the next few years as banks each create anything between 100 and 200 additional jobs in the city.
Winter says the moves are likely despite progress in negotiations for a Brexit transition period: the ECB requires banks to have detailed plans for how they will be set up in Frankfurt in March 2019 (when Brexit is due to take effect) in case there is no transition period. “We don’t yet know what the transition period will look like,” says Winter. “We will probably not know until November or December [2018].” Banks are putting in place the infrastructure that would be necessary for them to be operational in Frankfurt in March 2019, says Winter.
In the meantime, Winter himself is among those campaigning for Germany’s stringent labour laws to be relaxed for anyone earning over €234k. Germany’s labour laws are it’s major disadvantage in attracting bankers and relaxing them is in the interest of everyone, says Winter: “Employees want to move quickly to a new employer and not wait for the outcome of a labor court process. In this context, it is also important to set a cap on severance pay.”
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