Morgan Stanley plans to double its staff in Frankfurt from 200 to 400 in time for the March 2019 Brexit deadline, according to the Press Association. The move is reportedly intended to be a short-term solution as the investment bank considers other cities as more permanent headquarters.
Relocations will apply to some London traders as well as marketing and administrative staff. A smaller number of banking and trader roles will reportedly also be moved to Paris, Dublin, Madrid and Milan.
The news comes the same week that Citigroup joined the growing ranks of UK firms to announce they are relocating to Frankfurt. Citi already has 350 employees based in Frankfurt and by moving the bank’s broker-dealer operations there, it is expected that 150 to 250 posts will be created. However, it is believed that the UK capital will remain the group’s headquarters for Europe, the Middle East and Africa (EMEA).
The European Securities and Markets Authority (ESMA) recently warned UK companies hoping to open outposts in the EU that ‘letterbox’ entities will not suffice. Businesses will need to show that they have genuinely relocated with “appropriate” human and technical resources in an EU domicile to reap the rewards of the single market. ESMA also asked state authorities to make sure relocating companies comply with Mifid II from day one.
Whether the Citigroup and Morgan Stanley (currently employing about 5,000 people in London) partial relocations are will satisfy ESMA remains to be seen.
Morgan Stanley and Citi’s relocation plans are a win for Frankfurt, as the Germany city and Paris have been frontrunners in the fight to win British business. Both recently attempted to charm big banks from London by proposing adjusted employment law to make it easier to fire top earners. But Frankfurt appears to have stolen the march in recent months, despite Paris’ strengths. Illustrating the point, Citigroup announced its plans on Tuesday – the same day that France was listed at the world’s top ‘soft power’ by the ‘Soft Power 30’, which combines polling in 25 countries and digital data to measure a country’s impact.
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