“Faster, higher, stronger, together.” These words were not spoken by the now famous Minister of Sports Amélie Oudéa-Castéra, but by Marie-Anne Barbat-Layani, president of the Financial Markets Authority. If it adopts the famous motto of Pierre de Coubertin, it is to defend a future law on the financial attractiveness of France. Its objective: to strengthen the influence of Paris as a leading financial center. A recent status, which it owes to Brexit.
Three years after the divorce from the United Kingdom, the City of Lights replaced London as the leading financial center in the European Union. Its attractiveness has grown significantly in recent years, even beyond Europe, to the point that the new Ofex ranking of the Louis-Bachelier Institute and the Center for Financial Studies places Paris as the fifth financial center on the planet according to this criterion. Behind New York, Chicago, London and Tokyo, certainly, but ahead of heavyweights like Frankfurt, Zurich, Singapore and Hong Kong.
Let’s remember the facts. Since Brexit came into force in 2021, transactions involving European stocks, bonds or currencies can no longer be processed in the UK. The City has certainly retained the vast majority of its 800,000 jobs, but some had to be moved to the Old Continent. To recover them, Paris was not the favorite against Frankfurt, cradle of the European Central Bank, or Dublin and its advantageous tax system. But it is the French capital that is doing best, with nearly 6,000 jobs coming from London. “Back here after seven years in Frankfurt, I am surprised to meet so many foreigners in the corridors. Many meetings are held in English, including with French clients, which was not at all the case before” , appreciates Maria, a thirty-something who works in Paris for a global asset management giant.
A virtuous circle has begun
Among American financial institutions, the movement is impressive. Bank of America has increased its local workforce sevenfold since Brexit. 80% of Goldman Sachs traders in continental Europe chose Paris. Citi has set up its main European hub there. The French capital has also attracted the New York hedge fund Millennium, the famous crypto platform Binance, the very rich Singapore sovereign fund Temasek, but also the National Bank of Canada, the Nigerian bank Access and the National Bank of Australia. A virtuous circle has begun. “The network of foreign bosses continues to weave. They talk to each other. As their opinion is disinterested, we ensure that they meet the managers who plan to settle with us,” explains Lionel Grotto, director of the Choose Paris Region agency. The government is rubbing its hands. The financial sector surplus now brings in nearly 5 billion euros per year, almost double its 2019 level. Not counting the windfall represented by the spending of wealthy traders…
This undeniable success is primarily due to structural reasons. Paris has recognized major schools such as Normale Sup, Centrale or HEC, and solid training in mathematics, recognized by numerous Fields medals (the equivalent of the Nobel Prize in this discipline). Its Polytechnicians become excellent “structurers” and other specialists in derivative products, appreciated for their abstraction abilities. Furthermore, France concentrates the vast majority of its headquarters of large groups in Ile-de-France, including world champions such as LVMH, L’Oréal and TotalEnergies. This centralization makes life easier for salespeople, who do not have to travel to the four corners of the country. The supervisory authorities (AMF and ACPR) are also considered to be of good standard. Finally, foreign bankers appreciate the cultural dynamism of the City of Lights, the presence of international schools (the number of which would have doubled between 2016 and 2022), the quality of Parisian life… and its very practical location: the Eurostar allows you to reach London in three hours. With only 700,000 inhabitants, Frankfurt, “much more provincial and boring”, in Maria’s words, suffers from the comparison.
Financial establishments have spared no expense in welcoming defectors from London in the best conditions. The offices of Goldman Sachs, for example, are located in a beautiful building on Avenue Marceau with a breathtaking view of the Arc de Triomphe. JPMorgan sits at 14, place Vendôme, between the Chanel and Dior boutiques. “Of the 500 people who came from London, a hundred went to work on foot and 120 by electric bike. Unthinkable in London!” smiles Kyril Courboin, CEO of JPMorgan France. Farewell, the Tube.
JPMorgan is a textbook case. In 2016, when the British voted in a referendum in favor of Brexit, the largest American bank launched a study of seven potential destinations in Europe – including Frankfurt, Luxembourg and Dublin. At that time, Paris was ranked… last. Two years later, she had moved up to second place on the list! “The municipality, the Ile-de-France region and the French state have set up a very efficient one-stop shop to answer our questions. We were pleasantly surprised,” says Kyril Courboin. Harvard Business School has even achieved this feat a case study. Consulted, the employees chose the French capital to the detriment of Frankfurt, the other “finalist”. The result is spectacular: JPMorgan’s Paris office, which had 250 people before Brexit, now employs 900, of 43 different nationalities. Around 60% of new employees do not speak French.
“A very smart choice”
The pro-business image of Emmanuel Macron, elected since 2017, inevitably weighed in the balance. As well as the reforms implemented by its teams: the tax regime favorable to impatriates [NDR : salarié de l’étranger venu s’installer en France, soit le contraire d’un expatrié] ; the capping of compensation to be paid in the event of litigation to the industrial tribunal; the abolition of the ISF; the flat tax at 30%… The appointment as “Mr Brexit” of Christian Noyer, former vice-president of the ECB and ex-governor of the Bank of France, with an address book as long as his arm, was perceived positively. “It was a very smart choice. He ‘pitched’ all the bosses of the international banks, then Emmanuel Macron and Bruno Le Maire did the rest,” testifies Kyril Courboin. The Minister of the Economy also made a visit to New York in December to attract the heads of banks and investment funds and answer their questions. A sign of this mobilization of the executive, the boss of JPMorgan Chase, Jamie Dimon, received the Legion of Honor at the end of 2022 from the French president.
But the attractiveness of the capital does not depend only on France. The European project of a capital markets union, which would facilitate investments in any country of the Union, must be relaunched. It will in fact make it possible to better circulate financial flows between businesses and savers, at EU level. Enough to create a huge playing field for foreign banks. This is where the next battle between London and Paris will be played out.
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