Nery Alaev discusses banks, offices and Brexit.
A Bloomberg article has recently made a wise observation about the recent spate of rumours and stories about UK banks leaving the country’s capital, London, to avoid the negative effects of Brexit. It is that, even if the banks do decide to move their bases, there may be a chronic lack of space for them to move into.
I’ve chosen to look deeper and summarise.
The article begins by pointing out that Frankfurt, Germany’s major finance hub and main contender for banks to make their new home, is lacking in prime office space alongside French capital Paris and Dutch capital Amsterdam.
This is a problem given some of the larger banks looking to move have many thousands of employees. For example, the article notes a comment from JPMorgan Chase & Co. CEO Jamie Dimon, who said before the vote that he’d move 4000 employees to the continent. This, if carried out, would take up two of the five spaces that Frankfurt, for example, has for contiguous space that can contain 2000 employees.
It may be that a large, ambitious building project would have to take place in Europe if the banks were to move – this may be difficult given the different nature of building policy in continental Europe compared to the UK.
Luck of the Irish?
Looking West instead of East, there may be room for Ireland to grow as a home for banks – said banks will have to compete with the biggest names in Silicon Valley, including Twitter, AirBnB, Facebook and Amazon for space.
Ireland also suffers from a size problem, with no building currently able to house 2000+ employees – the race is on to complete a new structure that will within two years.
In summary, the issue of space is something of a thorn in the side of the Brexit-anxious banks – I don’t know if it will stop them from leaving however.
Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.