Following Brexit, many banks, insurance and investment companies will have to transfer part of their businesses from London to the EU.
The following five European cities are most likely to replace London as the largest financial centers in the EU, DW wrote.
Germany’s Frankfurt has probably the best chance of becoming Europe’s new financial capital, DW noted. The headquarters of leading German banks and investment companies, the largest stock exchange in continental Europe as well as numerous offices and branches of foreign financial institutions are located here. However, the main trump card is that the headquarters of the European Central Bank (ECB) is also located in the city.
Another important factor is the upcoming merger of the Frankfurt and London stock exchanges. The decision to combine the two most important European trading platforms was made in February 2016, when everyone expected the UK to stay in the EU.
Another possible candidate is the French capital. Whether it will become Europe’s financial capital will largely depend on the European Banking Authority (EBA).
On the one hand, the EBA might move to Frankfurt, where there are two other important financial regulators, and on the other, to Paris, where the European Securities and Markets Authority (ESMA) and the headquarters of the leading French banks are located.
Luxembourg, Dublin, Amsterdam
According to DW, Luxemburg, Dublin and Amsterdam also have good chances of becoming financial centers after Brexit.
European authorities in Brussels oppose the concentration of European institutions only in a few major centers and seek to relocate them in different EU cities. Therefore, the EBA could also move to Luxembourg, Dublin and Amsterdam.
English language, Anglo-Saxon culture and the offices of numerous high-tech companies from the United States all favor Dublin. This and low taxes are very important factors for British and American bankers.
The taxes in Luxembourg are also very low. This is one of the reasons why there are numerous investment funds located in the country. Amsterdam is also a likely candidate to become Europe’s financial center.The headquarters of the Dutch and Euronext stock exchanges are there, as well as longstanding close ties of local businesses with England.
Thus, according to DW, banks and financial companies are likely to relocate their businesses from London to a number of various cities in the euro zone, but the high-priority directions will still be Frankfurt and Paris.
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