Frankfurt Doesn’t Want London’s Bankers
In the scramble to lure financial jobs from London in the wake of Brexit, Frankfurt is leading the pack—at least nine banks have said they’ll move positions there. That could ultimately mean 10,000 new jobs and well over $100 million annually in new tax revenue for the German financial capital, auguring an economic and cultural rebirth. Micha Hintz hates the idea.
“Brexit will be very bad for people with a normal income,” says Hintz, an owner of the 37-year-old Karl Marx bookshop, echoing local activists seeking to protect what they say is a cozy, comfortable city with little need for the cash and glitz that legions of wealthy newcomers might bring. “It may be good for the city’s international competitiveness,” Hintz, 61, says from behind his impressively Marxian beard. “But what we need is affordable housing. And the population has no voice in this.”
If longtime residents of Frankfurt are leery of a Brexit-driven wave of new arrivals, the bankers themselves aren’t overly enthused about the idea either. The city of 700,000 can be charitably described as sleepy, at least when compared with London, one of the most culturally diverse places on the planet, with a population of 8.8 million.
Although few bankers will disparage Frankfurt publicly, off the record more than a dozen said they had little interest in moving to a place that has earned the epithet of “Yawnfurt” in certain circles in the City of London. One who is likely to be relocated says he’ll leave his family back in the U.K. and stay in hotels in Frankfurt for a few days a week. Another has agreed to move to Frankfurt for a temporary assignment but has exacted a pledge that the posting not last more than a couple of years.
For bankers, “the spreadsheet might say yes to Frankfurt, but the heart definitely doesn’t,” says John Purcell, an executive recruiter in London. “For all the potential commercial advantages Frankfurt might offer, there are major cultural issues to overcome.”
Frankfurt has about two dozen theaters that regularly stage plays; London has 10 times that number. London is home to 72 restaurants with Michelin stars; Frankfurt has 11. And where London’s high streets bustle every day and into the night, German law requires stores to close on Sundays, turning many of Frankfurt’s main shopping areas into ghost towns.
“Brexit could become a large stimulus package for Frankfurt’s economy,” Deutsche Bank AG Chief Executive Officer John Cryan said at a conference in September. But the city must beef up its infrastructure and create “a dozen additional theaters and a few hundred restaurants” if it wants that stimulus to happen.
Frankfurt’s medieval core, almost completely destroyed during World War II, was quickly rebuilt in the 1950s and ’60s, often in the austere style of the era, to create new housing and clear the way for cars. Outside the center, many stately 19th century mansions were razed to make room for nondescript office buildings. As more banks moved in and high-rises elbowed their way into the skyline in the 1980s, wags started calling the place “Bankfurt.” It wasn’t a compliment.
That’s changing, with many residents today proud of the forest of office towers. And when compared with London, Frankfurt is cheap: Although rents are rising, typical housing costs are just 55 percent of the average net salary, vs. 135 percent in London, according to the Bloomberg Global City Housing Affordability Index. Frankfurt, meanwhile, has spruced up considerably in recent years, with the riverfront, for starters, transformed into a 5-kilometer-long park with running and biking paths, cafes and restaurants, and a dozen museums.
Anchoring the eastern end of that park is the European Central Bank, which has brought almost 4,000 professionals, many of them foreigners, to the city, spawning international schools, restaurants, and shops to cater to their tastes. In 2014 the bank moved into a new 43-story building in a once woebegone neighborhood called Ostend.
“When I moved to Frankfurt, there was only one place in the whole city to drink decent espresso,” says Stefano Nardelli, an ECB economist who arrived shortly after the bank’s opening in 1999. And while some supermarkets now stay open until midnight, back then “it was impossible to buy groceries after 6 p.m.”
These days, ECB staffers can make a quick dash down to the riverfront to sip martinis, mojitos, or macchiatos in the bars that have sprung up around their new headquarters. On Friday evenings, the sidewalks nearby overflow with revelers eating, drinking, and chatting long into the night.
But facades of new buildings in the area are scarred with graffiti reading “One city for all.” Former residents have been priced out of their homes as modern apartment blocks displace warehouses and brothels for dockworkers, says Tobias Schmitz, an outreach officer for Tenants Help Tenants, a local nonprofit that advises renters in negotiations with landlords. An influx of highly paid bankers on the back of Brexit will only make matters worse, he says.
“We have seen how the Ostend has changed because of the ECB,” Schmitz says. “Frankfurt would be better off if more banks opted for Paris instead.”