LONDON — Germany’s financial hub, Frankfurt, is trying to attract its share of the Brexit-driven banker exodus from London by appealing to “risk takers” working in the financial sector.
The city has laid out plans to loosen certain labour laws for those financial services workers taking big risks with the prospect of big rewards.
“It turns out that a solution which is tailored to the needs of credit and financial services institutions clearly finds more support than a general, income-related solution,” Thomas Schäfer, minister of finance in the State of Hessen said in a statement, cited by the Financial Times.
“Banking regulation explicitly defines the risk bearers in such institutions, which provides an ideal starting point. The government of the State of Hessen anticipates that relevant legal changes may be possible following the German parliamentary elections this September, at the latest by autumn 2018.”
Previously the city had made plans to exempt high earners from certain labour laws related to redundancies, described in October 2016 as “imposing an upper salary limit on employee protections of €100,000 (£90,279) or €150,000, which would make conditions such as redundancy terms less generous.”
That law, if it had been passed, would have meant high-earning workers — like bankers — would not be entitled to as strong job protections, making them both easier and cheaper to sack.
However, the city is now looking to impose those changes on those engaged in more risky areas of business.
Employment law is thought to be a major sticking point for banks looking to move operations to the continent after Britain exits the EU, as the cost and time needed to fire employees is much higher than in the UK. For example, firing a banker making €1.5 million overall would reportedly cost around €150,000 for a bank operating in the UK, but would be almost the equivalent of their total pay in Germany.
By proposing to relax those laws, Germany aims to attract more business from major international banks and financial institutions.
It seems to be working with some lenders already announcing plans to shift staff from London to Frankfurt. Last week, for instance, Japanese banking giant Nomura said it is applying for a licence to operate in Frankfurt as its European Union base after Brexit.
Currently, its official European HQ is in London. The move will affect very few employees — the bank will transfer fewer than 100 staff from London, where it currently employs between 2,500 and 2,800 people.
On Monday, another Japanese lender, Sumitomo Mitsui Financial Group, said it will make Frankfurt its EU base once Britain leaves the bloc.