One room, two atmospheres. On March 28, no less than 160 investigators from Bercy went to the headquarters of Societe Generale, Natixis, BNP Paribas and its subsidiary Exane as part of the CumEx Files, a vast tax fraud scandal that has affected Europe since 2018. The The National Financial Prosecutor’s Office is carrying out investigations into the arrangements made in France by these four establishments to allow their clients to escape the tax on dividends. Clearly, investors located outside France would have bought shares in French groups and then temporarily transferred ownership to these banks to avoid the dividend being taxed. A potential shortfall of 33 billion euros over twenty years for the French state. But while the tricolor establishments keep a low profile, their American counterparts continue to weave laurels in the Parisian square.
Since the UK voted to leave the European Union in 2020, more than 5,000 bankers have moved from London to the City of Light. A real “Brexode” from which Paris emerges as the winner, ahead of Frankfurt or Amsterdam. “It’s quite incredible. When we opened our Paris office, thirty-five years ago, we were less than ten employees – all French. Today we are 380 of around thirty nationalities, a quarter of whom do not don’t speak French,” says Céline Méchain, co-head of the Goldman Sachs office.
Our Grandes Ecoles are popular
“France is becoming the new Britain”, enthused at the beginning of March an editorialist from the Financial Times. Forget the grumpy country crushed by a bloated bureaucracy. Buried François Hollande’s punchline: “My enemy is finance”. In the space of two years, Anglo-Saxon banks have massively turned to the 8th arrondissement, on the edge of the Arc de Triomphe, to relocate activities formerly carried out in London.
Bank of America has increased its Parisian workforce sevenfold since Brexit. 80% of Goldman Sachs traders in continental Europe chose Paris. Citi has set up its main European hub there and will double the size of its trading room in the next two years. Top hedge funds like Millennium and crypto champions like Binance and Circle have also landed on the banks of the Seine. The movement is not about to stop. “Other announcements should take place in the coming months,” we whisper at Bercy.
Competition from the formidable Frankfurt, where the ECB is located, has been contained. France was leaving with its weapons, in particular the quality of its Grandes Ecoles. “The concentration of talent was a decisive criterion for us,” says Cécile Ratcliffe, director of Citi France. “Structurers” and other specialists in derivative products, mathematicians trained at l’X then at Société Générale or BNP Paribas, are appreciated for their capacities for abstraction. Morgan Stanley even set up its global quantitative research center in Paris. The strong presence of Frenchies in the London staffs of the Anglo-Saxon giants also weighed in the balance.
The CAC 40 within taxi reach
From a commercial point of view, Paris presents an attractive ecosystem: the headquarters of the CAC 40 are all located in the Paris region with a few exceptions (Airbus, Legrand, Michelin). The capital is home to strong and profitable banks and booming tech start-ups. Convenient centralization for financing and M&A consultants. “We supported Meilleurtaux, Back Market, Devialet or even Vestiaire collective in their fundraising”, illustrates Thierry Sancier, co-director of Goldman Sachs in France. Located two hours from London by Eurostar, Paris is also proud to host the first European bank (BNP Paribas), the second largest insurer in the world (AXA), the largest European asset manager (Amundi) and investment funds tier ones such as Ardian, Eurazeo, PAI and Wendel.
Above all, the quality of life played a decisive role. “The Paris conurbation, with its 10 million inhabitants, is the only megalopolis in Europe to rival London in terms of its employment pool, its schools and its cultural dynamism”, observes Jean-Charles Simon, General Delegate of Paris Europlace. Real estate is much cheaper and travel times are shorter than in London. Everything to please well-to-do but busy traders.
A favorable tax environment
Former investment banker, Emmanuel Macron has not skimped on the means to attract little geniuses of finance in the wealthy districts of the capital. The Choose France summits, these vast operations of seduction with international bosses, have changed the image of the country. Last November, the President of the Republic presented the Legion of Honor to Jamie Dimon, the boss of the American giant JPMorgan Chase. Never seen. During the first five-year term, the government abolished the ISF, capped industrial tribunal compensation, set up a flat tax on dividends and instituted a tax regime favorable to impatriates. Something to change the image of the country in the eyes of foreign decision-makers.
More surprisingly, the Anglo-Saxon banks praise the qualities of the tricolor regulators. The Financial Markets Authority and the Prudential Control and Resolution Authority would be responsive and competent in handling cases. A reputation that contrasts with the German equivalent, BaFin, the very one that did not see the Wirecard scandal coming. “Many banks across the Rhine complain of having slow and finicky interlocutors”, slips a good connoisseur of the sector. If even our administration deserves praise, then something has really changed!