Does London still make sense?
London has been the New York of Europe for most people who wanted to work in finance, but after the brexit the UK is losing a lot of power and I feel like things are just gonna get worse later. Financial centers of the EU will probably move to Paris, Amsterdam, Luxembourg, etc.
Considering this, do you think that Europeans should still have the goal of going to London or it doesn’t make sense anymore?
bump
As a Brit I'm thinking the same.Not sure LDN will have the same lure 5+ years down the line.
It will definitely go down. Those who claim “nothing has changed” need to understand that an actual MoU on financial services has yet to be agreed and that we are currently in a limbo. From the EU’s perspective, it just doesn’t make sense to have your financial capital on a foreign entity whose regulatory framework you don’t control.
The big question is where these jobs will move. Cities like Paris or Frankfurt may look appealing, but they are simply not open/welcoming enough for other europeans to want to move there long-term. I see a big chance that banks will end up working on a regional basis, with industry teams split across countries. I also believe this will be an easier sell to juniors/MDs (eg, an italian MD moving from London to Milan)
This being said, I am certain the UK will try to rejoin somewhere in the not so distant future. Perhaps in 20 years it will all feel like a bad dream for the UK.
PS: if there is one thing I can reassure you, is that the “London jobs will move to NYC” argument is total bs. Handling Europe’s business 5/6 hours behind in a country with a substantially different culture and notoriously hard immigration processes would be extremely ineffective.
What about just moving to Dublin, or even Belfast? My bank has a ton of jobs in Belfast, and is increasing presence in Dublin.
Nobody fucking wants to live in goddamn Belfast or Dublin or whatever
Yup I 100% agree. european finance will become significantly more decentralized. london will still remain #1, but amsterdam, stockholm, paris, frankfurt, zurich will see significant increases. some work may move over to hong kong and/or singapore as well.
NYC has too many issues wrt immigration and international finance regulations to replicate what made london so sought after.
Pardon my dumb question (I have never been to London), but does London becoming in lesser demand mean there's a chance rents would become less ridiculous?
What are your thoughts about Stockholm? Sweden has one of the highest if not the highest command of English in continental Europe due to education requirements, and thus they don’t have any language requirements to gain permanent residency (unlike France/Germany). I know today it’s mostly Nordic specific banking, but what do you think about its prospects as a more generalist location long-term?
I think the Nordics in general have three main drawbacks:
i) weather: this one is a minor one, but still there
ii) culture: it is notoriously hard to break into Scandinavian social circles if not from there, which is only amplified by the introverted culture
iii) taxation: taxes are too high for individuals who don’t necessarily see themselves living there long term thus will want to save as much as possible
Netherlands has higher
I'm at a US BB and they are trying to move as much as possible out of London and even put coverage teams in continental Europe. However, it obviously takes a lot of time given that many employees are not willing to relocate. Meanwhile, turnover is really high in IB so if they put new employees in continental European offices it shouldn't be too long before headcount reduces drastically in London.
Not as sure about PE though, but it would surely make a lot of sense to be closer to your investments for a PE firm. Personally, I went to London because that is still where a lot of opportunities are right now. Moreover, you can always make the move from London to your home country in Europe if the market dries up in London. Making the move the other way around is much more difficult.
It is and will remain the place that attracts the highest talent. Maybe some country coverage can be done regionally but that’s about it. Paris and Amsterdam are too small, Frankfurt is dead, Zurich is boring… practically, where would you even go?
Nope, the European market is very local and the increasingly preferred model of banks and PE firms is to be highly decentralised with local country teams doing the bulk of origination and execution, with a few London-based sector teams providing sector expertise only if and when required. Many of the largest and best European IB and PE firms have a relatively small London presence (e.g EQT, CVC, Lazard, Rothschild). This trend was occurring even before Brexit although now it has accelerated. In the news headlines you won’t see large absolute figures of staff transferring to Europe, but that’s mainly because of the high turnover in this industry. What happens in practice is that when a London-based MD leaves, they simply replace him with a Paris or Frankfurt MD.
"Many of the largest and best European IB and PE firms have a relatively small London presence (e.g EQT, CVC, Lazard, Rothschild)"
Lazard just moved into a bigger London office, and Rothschild literally owns a skyscraper in the city?
That’s not true at all for most large banks. The product and sector expertise sits in London and you have country specific generalists in Paris, Frankfurt, Milan, Madrid, Amsterdam etc. For large sectors like PU&I or FIG maybe there are dedicated sector people on the continent but mostly people are generalists and are there for relationships and some on the ground support on deals. Who does the lions share of work on a deal is usually case by case but most of it is still in London.
Nobody is arguing Brexit hasn’t been a disaster but the amount of staff you can shift to the continent can only go so high. The dealflow in any given country/region just isn’t large enough (at least at a big bank deal size) to justify holding sector expertise. Also, to be a sector expert you need to have a view of what’s happening across all of EMEA, not just your country.
London will always remain the financial center of Europe for 3 reasons: timezone, universities, and English.
Exactly this
Unis took a huge hit after brexit, I remember 6 years ago all the highest scorers from my school myself included dreamed about and moved to UK. That was made possible by EU being eligible for student loan.Now you need to pay 27k a year? All the brightest kids I now are going to germany or denmark for a few thousand a year.I still keep in touch with my uni professor, he talks about the insane marketing being done in China/India because that's where its most cost effective to find parents who will shell out 27k/yr for "uk prestige".All of this is more shit due to obvious conflict of interest, 2 candidates are equal, but one would pay 3x for uni.
Though it is also true that UK unis are attracting more and better students now that foreign uni students get a two-year visa to find work in the UK.
And 4th is that London is Europe's only true global city. No other European city compares. Try telling a senior MD to move to fucking Frankfurt
True - but I think that's the consequence rather than the cause. It's certainly a virtuous cycle/network effect - people are more likely to move here if there are communities of people like them.
Whichever way you decide to twist it, Continental European offices will always be looked at as satellite offices
Also, Paris/Amsterdam/Luxembourg/... are far less fun than London
Do you think Luxembourg could ever become a bigger market for PE/HF?
Way too small. It’s already bursting at the seams with people working in back office and private banking and commuting in from Germany, Belgium and France.
It’s a great place to live and the location for travel is incredible. But it’s pretty boring as well so most people with a top paying front office type role will want to live somewhere more exciting like London or Paris.
What are you people on about?
Banks have record headcount in London. Europe is a dying market so no one gaf about Paris, Zurich or Frankfurt, but an incredible amount of global (non US) banking work is led out of London including MENA, India, etc
People have been trying to call the top on London for 7 years ever since the Brexit vote happened. Good luck with that.
Outside of Finance, general life in London seems to be going downhill. The streets seem to be getting dirtier and more unsafe. The cost of living is bringing out a degree of lawlessness (grocery theft, watch theft etc). Essentially the quality of life isn’t what it used to be. Personally don’t see this recovering any time soon, especially with the dire situation the entire country is in economically.
We're just returning to a normalisation after 2-3 years of COVID.
Crime rates aren't any worse (might even be better) than they were in 2019 although they have moved up since 2016. Couldn't find any stats from before then.
You can count on one hand the number of globally relevant bankers who sit in Paris, Madrid, Milan, Frankfurt, etc and two hands bankers relevant on a pan European basis.
There are some good bankers in each of those markets but a very small number and they are almost to.a person purely regional
We can discuss the relative decline of Europe vs the US and what London needs to do to reinvent itself in light of Europe’s decline but it’s still 1B after New York in importance and still massive on a relative basis.
The flows which used to go through London are moving through offices in Frankfurt or Paris in the future/
Do language barriers matter in this case? Given that the global language today is English, does London still hold an advantage over other parts of Europe? Not many speak French or German, and learning those languages takes time. This could create an employment barrier for Europeans trying to do IB.
You need a country with a GDP large enough to be able to bail out banks when things go wrong. The only realistic alternatives to the UK are France and Germany. The Germans had to bail out all their crappy Landesbanks (which were stuffed full of US subprime loans) and don't really want to be a banking player (they just want to make sure that German corporates never become 100% dependent on US banks for funding). That leaves France. The problem with Paris is (i) language, and (ii) the French civil law system is seen as a disadvantage to the English common law system.
They are literally removing bankers bonus caps in the UK and you think people want to move to countries with >50% tax rates?
I think this is really easy. London will 100% remain *the* finance hub of Europe. Key personnel and all the big buyside shops are in London. I think the question isn’t whether you will have a drain of talent to other European cities (no one wants to go there). It’s whether people will leave London for New York.
Comp is low versus NY and while cost of living has crept up in both cities, London and Europe in general has been hit harder. GBP has gone to shit and that’s definitely affecting purchasing power too. The economics don’t really make sense for a lot of finance jobs in London anymore.
Recognise that immigration is a bitch in the US and it’s practically impossible to make the move but if you can move internally, obviously do it.
I can tell you, after having worked both in NYC and London, NYC is BY FAR more expensive, it’s not even comparable. So net, you’re off the same after taxes and expenses in London as you are in NYC. Then again, NYC is far more fun
Agree. It’s extremely expensive versus London. Worth it from both a career and social point of view.
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