Paris gets rid of the ‘backward’ label with expansion of international banks – 05/08/2023 – Market

Embarking on a financial career at a Wall Street bank in Paris may have been considered a consolation prize for those unable to find a job in New York, London or Hong Kong.

Saverio Michienzi-Rowedder, a sales and trading intern at Citigroup’s offices in the French capital’s luxurious 8th arrondissement, disagrees.

“People have noticed that Paris is not just a back office,” the 22-year-old business graduate said of the bank’s newly established program in the city, adding that several Citi colleagues are now seeking transfers.

While the testimony cheers Emmanuel Macron, the president of France, who has championed the city’s ambitions to establish itself as the European Union’s leading financial center post-Brexit, there is more concrete evidence that Paris’ appeal is growing.

Seven years after Brexit triggered a fight over a share of the sales and trading business that banks had to move to the continent to serve European clients, Paris has emerged as the winner when it comes to jobs.

“Today, the juniors who join us think, ‘I can start in Paris and build a career there,'” said Thierry Sancier, a director of Goldman Sachs’ Arc de Triomphe office. “In the 1990s, it was ‘good luck to you’.”

Bankers say breweries, international schools and the ability to live close to their city center headquarters add to the city’s appeal.

Paris is benefiting from a “winner-take-all” effect, said Ferdinand Petra, an associate professor of finance at the HEC Paris business school. “Once you start getting some people, others tend to think, maybe we should go there too.”

Petra highlighted that despite the strides the city has made, it still has a long way to go to challenge the world’s established financial centers. “It’s hard to see London disappearing and Paris replacing it,” she added.

But for now, Paris has the momentum. After moving a combined total of at least 1,600 employees to the city, Wall Street’s biggest banks are expected to increase their staff there by at least 420 people over the next two years, according to an assessment of plans by Goldman, JPMorgan, Citi, Morgan Stanley. and Bank of America.

Banks chose Paris as their main EU trading hub, attracted by a combination of business-friendly openings and tax breaks when Macron was elected in 2017, quick train connections to London and the lifestyle of a big capital that Frankfurt did not. could offer.

While the shift of finance functions from London to the EU after Brexit was not the exodus predicted by some, nearly 7,000 jobs were transferred, the EY agency estimated. Paris attracted 2,800, surpassing Frankfurt’s 1,800 and Dublin’s 1,200, according to the consultancy.

Using a set of criteria that factor in fintech, regulatory and insurance jobs, the French capital added just over 5,500 financial positions as a result of Brexit, according to an estimate by Choose Paris Region, a lobby group backed by the city government.

The moves by some banks have encouraged others. From HSBC and Barclays to US lenders like Wells Fargo and Bank of New York Mellon, Paris has become a landing spot for savvy investment bankers. The National Australia Bank established operations there last year.

Paris is also vying to be the home base for a new anti-money laundering authority planned by the European Commission that could create up to 450 jobs, said Lionel Grotto of Choose Paris Region.

Investors, including sovereign wealth funds like Singapore’s Temasek, are either hiring or setting up. Millennium Management doubled staff in Paris last year to around 50 people.

“It’s critical that others have made the decision to choose Paris as well,” said BofA’s global head of markets, James DeMare, on a recent visit to the city. “You want a good pool of talent. It gives people more comfort, more options.”

BofA was the first major Wall Street bank to consider moving hundreds of people from London to Paris in 2017. The bank’s workforce could grow beyond the 600 it has there now, DeMare said.

Known for its elite math and engineering schools, Paris has fueled the ranks of international banks for decades with young recruits, albeit largely in London or at domestic heavyweights like BNP Paribas and Société Générale. More banks are now targeting Parisian universities for local hires.

Morgan Stanley chose Paris as a research center to support its trading team, made up of “quants”, or specialized quantitative analysts. The goal is to expand to about 100 people this year, double the original plan, after New York executives were impressed with recent hires, said Emmanuel Goldstein, head of Morgan Stanley in France.

But the challenges Paris faces are still clear.

London, which is in an ongoing duel with New York to be the world’s leading financial center, still has more than 430,000 jobs linked to financial services, according to TheCityUK. Choose Paris Region puts Paris’ number at 340,000.

Even with the migration of jobs, London’s dominant share of pan-European revenues in key areas, including mergers and acquisitions and corporate lending, has remained largely intact since 2016, according to data from Dealogic.

Foreign banks, however, are reluctant to move more back-office and data center staff to France and elsewhere in the EU, because of the costs as well as the advantage of keeping these functions centralized, including in the UK.

“We’re not going to proactively bring them in,” said a senior manager at an international bank. “At the moment, in Paris, it’s the essential functions and jobs.”

Many post-Brexit staff transfers have come under pressure from the European Central Bank and local financial supervisors, who after Brexit took effect in early 2021 required banks to end temporary arrangements they had made before. Regulators also want risk-taking to be managed by teams at the place where the business is done.

While Brexit has encouraged France’s government to think more about Paris’ future as a financial capital, the country’s own politics could still cast a shadow over those ambitions.

Since a labor law reform in his first year in office that made it easier to hire and fire workers in France, Macron has sought to flaunt his pro-business credentials.

A former Rothschild investment banker, the president courted Wall Street heavyweights, including BlackRock chief executive Larry Fink at the Elysee Palace and JPMorgan boss Jamie Dimon in elegant summits at Versailles.

But the upcoming presidential election in 2027, in which Macron will not be able to run again but in which Marine Le Pen, the country’s far-right leader, may seek to run again, remains a potential source of instability.

For now, some banks face far more mundane headaches as they expand in Paris. Kyril Courboin, who runs JPMorgan France, said plans to increase its headcount from 800 to 1,000 are straining its space — and, in addition, a growing number of executives from other parts of the bank are arriving.

JPMorgan, which bought a second seven-story office in 2020, is looking for more space near its central base on Place Vendôme.

“As we become the commercial center of the EU, we get a huge amount of visitors every day, from the UK, from New York – up to 50 or 70 people a day,” said Courboin. “We’re starting to run out of space, it’s a real problem.”