Brexit: Germany advises US banks on moving offices from London to Frankfurt

European financial centres are hoping to capitalise on foreign banks’ concerns about losing passporting rights

Volker Bouffier is in New York to meet representatives of major US banks and discuss their options for retaining access to the EU market

A German minister is meeting representatives of major US banks as Frankfurt increases its efforts to lure businesses and talents from London while the UK prepares to leave the European Union.

European financial centres are hoping to capitalise on foreign banks’ concerns about losing passporting rights, which allow them to sell their services freely across the rest of the EU and gives firms based in Europe unfettered access to Britain.

Volker Bouffier, leader of the German state of Hesse and a senior figure in German Chancellor Angela Merkel’s CDU party, will be meeting representatives of major US banks this week to discuss their options if they wish to retain access to the single market, Thomas Schaefer, the state’s finance minister, said at a conference in Frankfurt, reported by Bloomberg.

In the run-up to the EU referendum Mr Bouffier said he favoured a tough position in negotiations that would deny the UK access to the single market.

He said: “That sort of a concept that the UK still might have a common market with the EU afterwards is in my opinion a pure illusion.”

Germany is not the only country keen to present itself as the best location for banks to set up their EU headquarters.

"Brexit will open new opportunities to euro-area banks," Vitor Constancio, European Central Bank vice-president, said at the same conference.

London banks provide some $2.5 trillion (£2 trillion) of loans to the rest of the EU and carry out a “big percentage” of euro-dominated transaction, Mr Constancio said.

“The latter is bound to change with Brexit,” he added.

Last month, France set up a special task force of corporate leaders and leaders aimed at luring financial jobs from London as it withdraws from the UK.

Paris’s financial district also unveiled an advertising campaign aimed to underscore the attractiveness of the French capital for business in the wake of the Leave vote with the slogan: “Tired of the fog? Try the frogs. Choose Paris La Defense.”

The news come only a day after Sir Howard Davies, the chairman of RBS, warned that banks could pull out of Britain unless Theresa May secures a post-Brexit transition plan.

He said American and Japanese bank are very concerned at the prospect of a hard Brexit and are drawing up contingency plans.

“They will not wait because they have to make a decision which will allow them to be, to continue to function in the event of a hard Brexit if that's a possibility.

“So they will not sit back, they are currently making contingency plans and once you’ve got a contingency plan – hey, there is a risk you might implement it one day.”