The race to secure banking and trading personnel looking to relocate out of the UK ahead of Brexit is still ongoing. While Frankfurt and Dublin have emerged as the frontrunners, Amsterdam has deftly and quietly outflanked both in terms of regulatory incentives, an enticing carrot for lenders.
July represented a watershed moment for the banking industry, with the Bank of England mandating more concrete relocation plans from banks operating in the UK. Consequently, a consortium of banks rolled out their plans to relocate elements of their trading operations within the bloc, whilst pursuing the requisite licenses.
Where will they end up?
However, while the announcements have died down, the race to secure thousands of trading jobs and other personnel remains undecided. While Frankfurt and Dublin both remain as some of the most plausible and welcome options for banks, Amsterdam has an edge in terms of its regulatory authorities.
In particular, the Dutch Authority for the Financial Markets oversees some of the most essential European proprietary trading firms outside the UK. One clear distinction is that the Dutch regulator allows such firms to trade with big pension funds and insurance companies without treating them as clients, which greatly reduces the legal and regulatory burden, according to a Bloomberg report.
Consequently, Amsterdam has emerged as a hub for trading firms looking to set up shop in the European Union. Over the past few months, this has led to NatWest Markets and Tradeweb both installing operations in the Dutch city. The city has also managed to entice other fixed income and derivatives trading venues, including MarketAxess.
Another critical piece of the puzzle is Amsterdam’s softening stance on bonus limits for banks. Dutch banks face limits to bonuses, which can be no more than 20 per cent of fixed pay, as opposed to other EU banks that pay bonuses of up to double the fixed pay. However, while previously towing a hard line, the city has gradually hinted at rolling back the cap so long as banks employ at least 75 percent of their staff outside the Netherlands.
Faster than the competition
Additionally, proponents of Amsterdam were also given a welcome boost, so to speak, from a recent Equinix report. The report showed that Amsterdam boasts an inherent advantage in terms of data links and bandwidth, with 83 terabytes per second – this was the second best figure in Europe, trailing only London, and beating Frankfurt’s 74 terabytes per second.
While Amsterdam will need more than quick data and a few regulatory carrots to overtake Frankfurt and Dublin, the city has seen a late-game rebound in popularity. With several thousand employees still seeking relocation out of the UK, Amsterdam may still yet emerge as the winner in the Brexit banking race.