If any city can make claim to being the European Union’s new pre-eminent hub, it’s Paris. — Bloomberg
FOR decades, London was the main nexus of European finance, melding continental money with transatlantic ideas of what to do with it. But two years after Brexit became a reality, there’s been a clear shift across the Channel.
The spoils are being shared by European Union cities, creating a more fragmented landscape.
It’s one where banking of various stripes gets done in Paris, shares trade in the Netherlands, and corporate lawyers and accountants pore over the details in Frankfurt. Dublin, Milan, Madrid and Warsaw are playing important supporting roles.
But if any city can make claim to being the bloc’s new pre-eminent hub, it’s Paris.
The city’s allure may have been tarnished this year by protests against President Emmanuel Macron’s plans to raise the retirement age, which led to nationwide strikes and images of burning garbage in the streets.
New banking reality
But the numbers working at the offices of Wall Street titans point to a new European banking reality, one that won’t easily shift back after a mammoth relocation of money and brains.
JPMorgan Chase & Co has about 550 markets staff including sales people and traders in the city now, a 22-fold increase on 2019.
Bank of America Corp’s headcount – at 600 – is six times higher than before the 2016 Brexit vote. Citigroup Inc is building a new trading floor around the corner from the Avenue des Champs-Élysées.
The global markets team at Goldman Sachs Group Inc has more than doubled in the last two years, and the bank sees those numbers increasing further.
“Paris is now our largest trading hub in the European Union (EU),” Marc d’Andlau, one of Goldman’s co-heads in France, said in an interview.
“Back in the day, if you didn’t sit in New York, London or Hong Kong you could feel remote. That’s not the case anymore.”
London is still vastly bigger in terms of staff numbers, assets and volumes of business, but the UK’s departure from the EU is eroding its status. The city has effectively given up its mantle as the default location for companies to tap global pools of capital via stock and bond markets.
And even amid the trouble on the Parisian boulevards, France’s top officials are promoting the city’s Brexit wins and predicting the trend of recent years will continue.
“Contrary to other cities, which have attracted one or two kinds of financial services, Paris is the only one to have benefited from relocations on all segments of the financial industry,” Francois Villeroy de Galhau, France’s central bank governor, told a group of bankers in New York this month.
Steady shift
“More important still, these moves were not one-off events: the momentum has lastingly shifted from London to continental Europe. We observe a steady shift, which shows no sign of losing steam.”
Figures from the European Banking Authority published in January showed the number of investment bankers and traders in France earning more than 1mil euros (US$1.1mil or RM4.9mil) was up almost 80% since 2017.
While the big early wave of relocations is largely over, many executives who spoke to Bloomberg said they expect headcount to keep growing from local hiring.
Goldman Sachs partner Lear Janiv, a 16-year veteran of the firm, has moved from London to Paris to become head of Fixed Income Clearing Corp and equities trading at the bank’s main EU unit.
And it’s not just banks; hedge fund Millennium Management has roughly doubled its employees in Paris in the past year and plans to keep expanding.
The influx of wealthy traders and dealmakers is already helping to push up demand for things like bilingual private schools and prime apartments with Instagrammable views of the Parisian skyline.
Relocation advisers
Banks offer relocation advisers, language lessons, and working conditions fit for an A-grade international city rich in culture and opportunity.
At Goldman’s offices, government bond traders look out onto the Arc de Triomphe.
Bank of America (BofA) operates out of a five-storey, Art Deco converted postal headquarters.
Nearby, the streets are dotted with stores selling Louis XVI-era rosewood furniture and drawings by Picasso.
“We wanted to make sure that our employees settle and succeed in Paris,” said Vanessa Holtz, who runs BofA’s operations in France covering Europe.
“To make them stay and establish the European hub as their home is a very important process, and Paris has it all.”
BofA’s French investment banking business, led by Jerome Morisseau and Emmanuel Regniez, has also doubled its headcount since 2021.
Beyond the immediate rush to get the new financial plumbing and manpower installed, the work of recent years will have ramifications far into the future.
Foundational effect
Stephane Boujnah, chief executive of stock-exchange operator Euronext NV, recalls the foundational effect that London used to play in the lives of financial professionals. Like Villeroy, he says a long-term change has begun.
Since early 2018, nine of the biggest international banks have increased the assets booked at their eurozone entities more than sixfold, according to data from the European Central Bank (ECB).
The relocation effort has been a huge task. The ECB says no authority ever had to assume oversight of so many foreign investment banks over such a short period.
That movement of money is being matched, to an extent, by the movement of people.
Consultancy EY says that about 7,000 staff switched from London in the initial phase. Going forward, financial hubs in the region will be built out through local hiring. Last year, Goldman took on its first cohort of interns in Paris. — Bloomberg
William Shaw, Alexandre Rajbhandari, Sonia Sirletti and Nicholas Comfort write for Bloomberg. The views expressed here are the writers’ own.
