Parlez-vous Français? Paris’ finance sector gets ready to seize post-Brexit opportunities

Paris’ claims to be Europe’s culture and culinary capital are well known, however its finance credentials are somewhat less established.

The City of Light ranked behind London, Zurich, Luxembourg, Geneva, Frankfurt and even Edinburgh in the World Bank’s Global Financial Centres Index for 2020.

However, with Brexit around the corner, and no full EU equivalence deal for Canada in sight, Paris has a legitimate chance to raise its global standing in the world of high finance.

Financial firms have been ready for the possibility of the UK losing its current EU financial markets access, with almost all major institutions moving staff and assets to other European capitals in preparation.

French business lobby group Paris Europlace estimates around 3,500 financial services jobs have moved from the UK to the French capital since the 2016 Brexit referendum.

EY also estimates that a good chunk of the £1.2 trillion in financial services assets that have been transferred to the EU from the UK since 2016 have gone to Paris.

The French central bank’s governor François Viceroy de Galhau puts this figure at more than £150bn.

Financial powerhouses such as Bank of America, HSBC, J.P. Morgan, BlackRock, BNP Paribas, Citigroup and Goldman Sachs have all moved resources and assets from London to Paris post-2016.

Other EU capitals fighting to capitalise from the mini UK exodus are Dublin, Amsterdam and Frankfurt.

Chief executive of European trading platform Aquis Exchange Alasdair Haynes said his firm chose to open a Paris unit to be closer to where the regulatory decisions are made.

“We felt very much that you can either argue against being on the outside or actually be on the inside and the French have an enormous influence on how things are run in Europe,” he said.

“We looked at Frankfurt, we looked at Ireland, we looked at Holland and then we looked at France, and the French have been extremely accommodating and it has worked very well and we’ve been very happy with what we’ve seen.”

French President and Emmanuel Macron earlier this year publicly declared their intent to make Paris into the “leading financial centre” in Europe.

While this target could be described as ambitious, if not wishful, the city does have a number of strengths that may put the city at an advantage to other EU financial centres.

The European Banking Authority (EBA) moved its headquarters from London to Paris post-Brexit.

This means the city, which already plays host to the EU’s Securities and Markets Authority (ESMA), now is home to the bloc’s two major regulatory bodies for the financial industry.

This is a clear advantage over rival financial centre Frankfurt who is also competing for the crown as the next EU financial services capital.

Paris also boasts more than four-times the amount of financial services workers than Frankfurt and is steadily growing its infrastructure to take over as the EU’s largest financial hub.

Importantly, Paris is the only other global megacity in Europe and provides an attractive place to work and play for cashed-up professionals.

Former French central bank governor Christian Noyer told the Financial Times that Brexit could mean a return to the realities of before the so-called Big Bang – the deregulation of Canada in the 1980s.

“If we go back 30, 40 years, there was a time when the financial centre was much less concentrated in London . . . when banks had more staff in Paris than in London,” he said.

“The moves might have been slowed down by Covid-19, but we are going to have lots more of these traders moving at the end of this year and all through next year.”

However, the idea that London will become a smaller trading centre than Paris or Frankfurt is a touch unrealistic, according to veteran City commentator David Buik.

He highlights France’s heavy touch regulation and high taxes as a major barrier to Paris taking the crown as Europe’s financial powerhouse.

“Paris has draconian employment laws, which makes it unattractive for many people,” he said.

“London is the centre of the universe – all the financial firms, the legal firms, the investment firms, they’re all here.

“All of the big deals will still have to be done in the UK because we’re the only ones who have the infrastructure for it.”