European Financial Hubs: Focus on Paris

januari 16, 2024

As mentioned last week, this week’s article will focus on the financial hub of the city of Paris. Not only will the strong position of the city on the financial world map be presented, but also how Paris succeeded in maintaining a strong global position in the financial world.

France’s success in attracting banks from London to Paris after Brexit has surpassed expectations and is increasingly evident in the country’s balance of payments, as announced by the central bank in July 2023. Paris’s emergence as a post-Brexit leader can be attributed in part to its similarity to London as the European hub, being a genuinely global city situated at the heart of a populous nation. Unlike other European cities such as Frankfurt, Milan, or Amsterdam, Paris uniquely combines business, politics, and culture in a centralized location. Following the UK’s decision in 2016 to exit the EU, the French government vigorously campaigned for international banks to relocate their European operations to Paris, facing competition from other financial hubs like Frankfurt, Amsterdam, and Dublin across the continent. These efforts are proving fruitful, with Wall Street banks such as Bank of America and JPMorgan expanding significantly in Paris, establishing regional trading hubs in the French capital. This trend is reflected in the balance of payments data, revealing that financial firms relocated from London to Paris contributed 1.5 billion euros to France’s financial services surplus in 2022, according to the central bank.

JPMorgan Chase & Co. has witnessed a substantial increase in its workforce in the city, with about 550 market staff, including sales professionals and traders—an impressive 22-fold rise since 2019. Similarly, Bank of America Corp. has expanded its headcount to 600, marking a sixfold increase since the 2016 Brexit vote. Meanwhile, Citigroup Inc. is constructing a new trading floor near the Avenue des Champs-Élysées. Morgan Stanley is also bolstering its presence in Paris, adding staff and establishing a new research centre to support trading activities. Goldman Sachs Group Inc.’s global markets team has more than doubled in size over the past two years, with expectations of further growth. The influx of affluent traders and dealmakers is already driving increased demand for amenities like bilingual private schools and luxury apartments boasting picturesque views of the Parisian skyline. Banks are offering comprehensive relocation support, including advisors, language lessons, and work environments befitting a top-tier international city renowned for its cultural richness and opportunities.

In 2022, transactions by France-based financial services firms with the rest of the world reached a record 10.4 billion euros, double the amount at the time of the 2016 Brexit vote. This surge was driven by a broad increase in commissions on securities and currency trading. The financial services sector played a pivotal role in pushing France’s overall services surplus to a record billion euros, complemented by robust income from tourism and the maritime sector. The latter benefited from high shipping rates and France’s status as the home of shipping giant CMA-CGM.

Furthermore, when delving into the fintech industry in France, in contrast to other European countries, France boasts a thriving Fintech ecosystem encompassing payment service providers, lending and crowdfunding platforms, as well as algorithmic and cryptocurrency trading companies. By 2021, the country had over 1,200 fintech entities. Although the UK is anticipated to attract the majority of European funding, significant opportunities abound for French fintech. The digital surge, accelerated by COVID-19, has fuelled the growth of digital channels, making them indispensable in this evolving landscape. Mobile payments and lending platforms have gained heightened consumer interest compared to previous years, leading to increased reliance on mobile phones. During the pandemic, the financial industry played an essential role, and startups demonstrated resilience, reinforcing their strategic, dynamic, and internationally attractive positioning in 2020.

France’s fintech ecosystem stands out as one of the most dynamic in Europe, contributing to Paris’s allure as a financial centre. The French government is actively fostering this growth by making substantial investments to position Paris as a key player in the fintech economy. Paris’s ascent as a tech hub is aided by government initiatives like “Station F”, the world’s largest startup campus. The French Tech Visa Programme further encourages foreign entrepreneurs and investors by offering a four-year visa to relocate to Paris with their families. Consequently, the fintech ecosystem is experiencing growth from both domestic and international sources, driven by legal incentives.

In 2020, France demonstrated remarkable resilience compared to its English and German neighbours, being the only country to achieve growth despite the challenges of the COVID-19 pandemic. By October 2021, French fintech had raised €2,071 million, marking a significant increase, 2.5 times the amount raised in the entire year of 2020.

References

Credolab. (2022, March 31). Country Spotlight – France, Fast-Growing Fintech Hub in Europe. Preluat de pe Credolab: https://www.credolab.com/blog/country-spotlight-france-fast-growing-fintech-hub-in-europe

Reuters. (2023, July 20). Paris success in attracting London banks boosts balance of payments. Preluat de pe Reuters: https://www.reuters.com/business/finance/paris-success-attracting-london-banks-boosts-balance-payments-2023-07-20/

Shaw, W., Rajbhandari, A., Sirletti, S., & Comfort, N. (2023, April 19). Banks Betting on Paris Say There Really Is Life After London. Preluat de pe Bloomberg: https://www.bloomberg.com/news/features/2023-04-18/brexit-bank-moves-boost-paris-milan-amsterdam-over-city-of-london?leadSource=uverify%20wall

Photo:
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