Flow of French bankers to London dries up
The flow of French financiers moving to London to escape the tax increases of France’s socialist government has ground to a halt — thanks to the Brexit vote.
Senior bankers say financial groups have put the brake on sending staff to London since Britain’s vote to leave the EU over concerns about the future of the City as a financial centre.
This is a marked shift from 2012 when President François Hollande declared finance his “enemy” and proposed hitting the rich with a 75 per cent tax rate — the following year the number earning more than €100,000 a year in France moving abroad jumped 40 per cent, according to the government. This was an acceleration of a trend that led to 42,000 millionaires leaving France between 2000-14, according to a report by New World Wealth.
Many moved to London’s South Kensington, sometimes referred to as Paris’s 21st arrondissement and home to the French Lycée, to became part of the roughly 300,000 French people in the capital — an estimated third of whom work in finance.
The French Quarter in South Kensington © Peter Wheeler/Alamy
François Soulmagnon, director-general of Afep, the lobby group representing more than 100 of France’s biggest companies, agreed the trend of bankers moving to London was drying up post-Brexit. “The flow of bankers going to London has largely stopped,” he said.
But a senior SocGen executive said that due to the uncertainty created by the vote they are holding back from creating jobs in London, even if they are not moving people away from the capital just yet.
“We’ve put planned internal transfers to London on hold,” he said. “And when we’re hiring, we opt for the non-London option whenever we can.”
A BNP Paribas executive said his bank was being equally cautious: “Officially there is no change in policy — but in practice we are not adding new jobs in London for the time being.”
There are growing fears that the City of London, which is home to some 250 foreign banks and the bulk of Europe’s capital markets activity, will have its wings clipped when the UK finally leaves the EU.
Many in Brussels want London, the dominant currency trading centre, to lose its right to clear deals denominated in euros. UK-based banks could also lose so-called passporting rights to operate across the EU.
Some French bankers said that London also seems less attractive culturally, pointing to what they see as a more parochial attitude in the UK and the recent spate of anti-immigration hate-crime following the EU vote.
Jérôme, a junior banker at a large French bank, said that following the Brexit vote he was no longer angling to be sent to London, saying he prefers Italy. “London does not seem so cool any more,” he said.
The Brexit vote has already helped Paris seem — relatively at least — more attractive to international banks.
We’ve put planned internal transfers to London on hold. And when we’re hiring, we opt for the non-London option whenever we can
Laurence Harvey Wood, an employment lawyer at Freshfields in Paris, who works with US and European banks, said job cuts by non-French investment banks in Paris have slowed since the Brexit vote as they reassess their strategy.
“Some restructuring projects in Paris are getting put on ice,” he said. “Investment banks don’t know exactly what will happen [over the terms of Britain’s EU exit], so some prefer to wait and see how things stand in a year or two.”
French policymakers hope the end of the flow of bankers from Paris to London is a step towards a more momentous shift — financiers leaving London for Paris.
Before the referendum HSBC said it would move about 20 per cent of its London workforce — about 1,000 jobs — to Paris in the event of a Brexit vote, saying jobs would go from the trading room and investment banking.
Manuel Valls, French prime minister, has since announced improvements to the tax regime, including lower payments for expats moving to France: “We want to build the financial capital of the future … now’s the time to come to France.”
Many, however, are sceptical about whether Paris can become a serious financial capital and steal a large number of jobs from the City — even if the pull of London is diminishing.
Philippe Villin, a banker and adviser of former president Nicolas Sarkozy, said Paris “will never become a major financial centre” as long as social charges as well as corporate and personal taxes are so “stupidly enormous”.
He also criticised the taxe sur les salaires, a specific payroll tax levied mostly on banks and insurance companies in France.
“Paris, compared to London, is not even as fun as it once was,” Mr Villin added. “Nice restaurants are empty and the traffic has become terrible.”