Paris could overtake London as top financial centre

Paris could overtake London as Europe’s most important financial centre in a matter of years, French finance minister Bruno Le Maire said, after days of wooing American and European bankers in the Swiss Alps and gilded Palace of Versailles.

In an interview with Reuters at the World Economic Forum in Davos, Le Maire pointed to France’s strong regulatory framework, the business-friendly reforms being implemented by President Emmanuel Macron and the allures of Paris as a place to live.

“There will be a new leader after Brexit,” Le Maire said.

“I see the possibility for France to become in the coming years the most important financial centre in Europe and the UK is in Europe.”

Paris is one of several continental cities, along with Frankfurt, Dublin and Amsterdam, that want to lure business from City of London banks that are eager to stay based in Europe’s Single Market after Britain leaves the EU in March 2019.

But early indications are that they will see a trickle rather than a flood of jobs move in 2018, with the prospect of a “softer” Brexit discouraging large redeployments of staff.

In September, a Reuters survey of 123 firms showed that around 10,000 finance jobs would be shifted out of Britain or created overseas in the next few years if the UK is denied access to the single market.

That chimes with 10,000 losses the Bank of England said is plausible on Brexit Day in March 2019. In recent months however, some bankers have suggested it could be far less.

In the Reuters survey, Frankfurt was by far the most popular destination for the new roles, with Paris a distant second.

Still, Paris was given a boost in November, when the European Union decided to relocate its London-based banking authority to the French capital after Britain leaves the bloc.

And the French government has staged a high-profile lobbying campaign to lure banks away from London.

On Monday, a day before the Davos summit kicked off in Davos, Macron hosted a meeting of top bankers and businessmen in Versailles to give them the hard sell on Paris.

Among those who attended were Lloyd Blankfein, CEO of Goldman Sachs, and Jamie Dimon, who runs JP Morgan .

One US investment banker in Davos said Macron, himself a former banker with Rothschild, had made a very good impression at the Versailles dinner.

But the mood in Davos might best be described as wait and see. Bankers said France’s rigid labour laws and relatively high corporate taxes remained hurdles for Paris.

“Before making any decisions, we want to see if the reforms announced by Macron are there to stay,” the US banker said.

In the interview, Le Maire noted that two large systemic banks were already headquartered in Paris, in BNP and Societe Generale, and pointed to other strengths.

“We have a very strong regulatory framework,” he said. “And we have taken the necessary steps to be more attractive for other financial institutions all over the world.”

“That’s why I think that we have the best chance of becoming, tomorrow, the financial centre in Europe. Not the dominant one but the most important one,” Le Maire added.

The French finance minister, who ran in the presidential primaries for the centre-right Republican party before switching allegiances and joining Macron’s government, also touched on the issue of U.S. tax cuts, saying it would be wrong for European countries to respond with cuts of their own.

“It would not be the right answer. The right answer to the decision taken by the United States is tax convergence within the Euroepan Union and among European member states, especially within the 19 states of the euro zone,” Le Maire said.