Reports indicate that Bank of America is holding talks with a view to securing office space in the French capital as the United Kingdom makes preparations for exiting the European Union. Sources say that Bank of America intends to have some trading operations located in Paris.
According to the same sources approximately 100,000 square feet is required by Bank of America. Initially 300 employees will be stationed there but the space has a capacity of accommodating up to 1,000 people.
Paris vs Frankfurt
Bank of America’s decision to have some of its operations being run from Paris follows months of debate in the senior executive ranks of the financial institution over where to transfer their traders following Brexit. Last month reports had indicated that the head of fixed income sales, Sanaz Zaimi nad Bernard Mensah her colleague were rooting for Paris while the head of equities, Fabrizio Gallo, was in favor of Frankfurt. Some executives had proposed that trading be split by asset class with both cities benefiting.
One matter that still remains unresolved for Bank of America though is where the hub for investment banking will be located. Two months ago the chief executive officer of the American bank, Brian Moynihan, indicated that his location of choice would be Dublin, Ireland as the financial institution already possesses a banking license there.
End of passporting
On expectations that Brexit, which is expected to come into force in 2019, will mean the end of passporting – a legal principle which allows financial institutions to offer banking services to all their clients in the European Union while based in London, global investment banks have been wrestling with the decision of where to relocate. Nomura Holdings, Standard Chartered, Citigroup and Morgan Stanley have chosen Frankfurt as their EU hub. UBS and Goldman Sachs have yet to make a decision.
The building that Bank of America is eyeing is undergoing modernization and is located near the site where HSBC intends to have its European investment banking hub. HSBC which has a retail banking arm in France is said to be planning to transfer 1,000 employees from London to Paris.
French officials have in the recent past been floating proposals in a bid to woo banks. Some of the incentives that have been mentioned include relaxing payroll taxes for top-level earners. Last week French president Emmanuel Macron gave his approval for changes to the labor code which sought to ease the rules of hiring and firing.