Brexit: Citigroup to move some trading business from London as it chooses Frankfurt for new EU hub

The location, where Citigroup already has about 350 employees, is expected to handle some of the trading activities currently done in London

Citigroup has chosen Frankfurt as its newest trading hub in the European Union and plans to present that option to its board of directors this week for approval, according to a person with knowledge of the decision.

The choice to expand the bank’s existing broker-dealer in the German city means it will create between 150 and 250 new roles there, said the person, who asked not to be identified talking about internal policies. It’s yet to be decided if the jobs will be filled by moving existing employees or by hiring locally, and it’s likely to be some combination, the person said.

The location, where Citigroup already has about 350 employees, is expected to handle some of the trading activities currently done in London, though the UK capital will remain the headquarters for Europe, the Middle East and Africa, the person said. Sky News reported the decision on Monday.

Frankfurt has emerged as a winner of the Brexit vote, with Standard Chartered, Nomura, Sumitomo Mitsui and Daiwa Securities picking the city as their EU hub in recent weeks. Deutsche Bank is preparing to move large parts of the trading and investment-banking assets it currently books in London to its hometown of Frankfurt, people familiar with the matter said this month.

Citigroup has been considering the move for months. The firm was evaluating locations in Ireland, Spain, Italy, Germany, France, and the Netherlands, Jim Cowles, the bank’s top executive for the region, said at a Dublin conference in January.

Bloomberg News reported in November that the firm was in discussions with BaFin, the German regulator that’s seen by many as the only regulator outside of London capable of handling the banks’ complicated derivatives business, about moving some of its London-based equity and interest-rate derivatives traders to Frankfurt. The lender is also in discussions with the European Central Bank and regulators in EU nations including Ireland about relocating other parts of its operations.

Frankfurt is a natural pick for many international firms given a financial ecosystem featuring Deutsche Bank, the ECB and BaFin.

Even as the chance remains for a UK deal maintaining some sort of access to the single market, banks are preparing for the worst and want to have new or expanded offices up and running inside the bloc before the UK formally departs in 2019.

Bloomberg