Ministry of Economics, Energy, Transportand Regional Development

Welcome to Frankfurt.Welcome to Hessen, Germany‘s Business State and Gateway to Europe.

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Additionally, companies of other industries with EU headquarters in the UK will have to review on a new location as well because of potential tariff and non-tariff barriers to trade goods and services. Especially the value chains in the aero-space, automotive, chemical and pharmaceutical sectors, to name but a few, are highly integrated with continental EU mem-ber states. These industries do not only import many intermediate products from the EU but also export a high share of their output to the EU.

In addition to these value chains being threatened by potential customs duties, non-tariff trade barriers could also lead to in-creasing coordination costs. Furthermore, free movement of labour which will almost certainly be restricted has, until today, also been a growth-enhancing factor in the British economy – not only with regard to highly educated experts but also with regard to low-skilled labour. When competing over the rather static labour supply in the absence of free movement of peo-ple from and to the EU, fi rms may have to pay higher salaries. This in turn will raise their costs and thereby negatively affect their competitiveness in international markets.

Many international companies have traditionally used the UK market as a gateway to EU’s single market due to the English language but also because of its free market tradition. These companies may have to relocate business operations in order to be able to benefi t from the opportunities of the single market and the unquestionable sales possibilities that come with them. According to a survey by KPMG in September 2016, the majority of CEOs and decision-makers are considering relo-cating their headquarters or selected business units outside the United Kingdom.

What will change?

EU passporting rights

Euro clearing

Extra capital requirements

Additional and costly regulatory environment UK vs. EU

Free movement of goods, services, capital and people threatened

Customs and other tariffs

Non-tariff trade barriers

Market conditions in Europe are in a period of change. Companies are redefi ning their business models for the European market. The reason for this development is the British referendum of 23 June 2016 to leave the EU. This is an enormously signifi cant decision for global businesses and entails both challenges and opportunities for British, European and international companies.

Britain’s exit from the European Union – challenges and opportunities

Consequences for the Financial and Insurance Sector

Consequences for the Industrial Sector

So far, it is unclear how the relationship between the EU and the United Kingdom will be shaped in the future. However, trading relations with the United Kingdom are subject to change. Firstly, international banks and companies of the fi nancial and insurance sector are affected by the Brexit vote. London-based institutions consider relocating some of their activities to Frankfurt because they probably would not be allowed to conduct some of their EU operations outside the EU.

Which businesses are affected?

Corporate and investment banking

Listings, trading and lending

Deposit taking and payments

Regulatory and risk management

Legal framework of trade and investment

Delivery terms and conditions

Headquarter functions of fi nancial and industrial corporations

Sales, marketing, distribution, production and R&D activities

Hessen foreign trade relations 2015

Source: HA Hessen Agentur, 2016

(Percentage of the total export/

import volume worldwide)

Top 10 countries Hessen exported to Top 10 countries Hessen imported from

German economy – Europe’s No. 1 in GDPGerman political and economic stability offer growing business opportunities. Germany is the strongest economy in Europe and one of the largest and most successful worldwide. It plays a leading role in the European Union and benefi ts from the customs duty exemptions that membership provides. Germany accounts for about 20 % of Europe’s GDP (EU-28) and offers competitive tax rates. The German economy is both highly industrialised and diversifi ed – with an equal focus on both services and industrial production. ‘Made in Germany’ is a synonym for innovation and quality.

Hessen – Germany’s Business State and Bridge to EuropeHessen is one of the strongest and most international states in Germany with a GDP per capita signifi cantly above the national average.

Thanks to its central location in Europe and Germany and its international airport in Frankfurt, the region also serves as an outstanding logistics hub. Hessen is a major destination for foreign direct investments from the USA, China, the United Kingdom, France, Japan, South Korea and India.

The United Kingdom is also among Hessen’s most important business partners in terms of imports and exports of goods.

“Frankfurt offers excellent advantages for the fi nancial services as well as for the

industrial sector. We want to build a bridge for those seeking alternative locations

for their EU offi ces.”

Tarek Al-Wazir, Minister of Economics, Energy, Transport and

Regional Development, State of Hessen

Frankfurt – Financial gateway to the EU After the Brexit vote fi nancial services providers have to face fundamental new challenges. Already home to the European Central Bank, the German Central Bank and many international banks and global fi nancial services institutions, Frankfurt is prepared to be the economic gateway to the EU.

Japan 3.7 %Belgium 3.6 %

UK 4.0 %Spain 3.7 %

Italy 4.8 %Austria 4.5 %

Russian Federation 4.9 %Poland 4.5 %

Belgium 5.2 %China 4.6 %

Switzerland 5.8 %Italy 5.2 %

France 6.2 %Netherlands 6.1 %

Netherlands 6.8 %UK 7.5 %

China 9.6 %France 7.8 %

United States 10.6 %United States 12.8 %

Germany – outstanding location in the heart of Europe

Frankfurt – continental Europe’s fi nancial centre and capital of the Eurozone

Centres of Expertise

Regulators in Hessen

Frankfurt Main Finance – the fi nancial centre initiative for Frankfurt am Main

House of Finance at the Goethe University – Germany’s centre for fi nance-related research & education

Frankfurt School of Finance and Management – one of Germany’s leading research institutions, covering all relevant aspects of busi-ness, management, banking and fi nance

European Central Bank (ECB) European Systemic Risk Board

(ESRB) European Insurance and

Occupational Pensions Authority (EIOPA)

German Central Bank Federal Financial Supervisory

Authority (BaFin) Federal Agency for Financial

Market Stabilisation (FMSA) Global Legal Entity Identifi er

Foundation (GLEIF)

FinTech hub Frankfurt – digitalisation of fi nancial servicesInnovative start-ups are revolutionising fi nancial technologies and creating a new basis for the interaction between banks and their customers. Frankfurt and the Rhine-Main region are a centre for successful FinTech companies. The region has the highest growth rate of this business segment in Germany. More than 75 FinTechs are currently headquartered in the Frankfurt area.

The Frankfurt fi nancial centre stands for a successful and dynamic FinTech-market due to …… proximity to the well-established banking sector and fi nancial service providers

… access to regulation-related know-how and capabilities

… Europe’s leading region for ICT

… digital hub infrastructure

… cyber security competence

… large talent pool of academic excellence in fi nancial services and ICT

… “Digital Innovation & Fintech” programme at the Frankfurt School of Finance and Management

… excellent offers for start-ups from various institutions

… numerous networking events

FinTech ecosystem Frankfurt – incubators and facilitiesInternational FinTech companies will profi t from supply of talent, a creative environment and the following customised facilities:

Tech Quartier supported by several fi nancial instituions and the Hessen Ministry of Economics

FinTech Hub provided by Deutsche Börse

Main Incubator provided by Commerzbank

Digital Factory supported by Deutsche Bank

Accelerator Frankfurt GmbH

Leading fi nancial centre of continental Europe

Home of the European Central Bank (ECB) and the German Central Bank

Frankfurt Stock Exchange - among the world’s largest stock markets

199 domestic and foreign banks (+ 33 representative offi ces)

Europe’s largest futures exchange: EUREX

Capital market services with Frankfurt’s securities and derivatives exchanges

About 7,900 companies in fi nancial services

Vast selection of international consulting companies

Source: Boston Consulting Group, Brexit - Banker quo vadis?, 2016

Frankfurt ranks fi rst among the most attractive locations for fi nancial service providers with offi ces in London

Economic stability and rating of the target country

Pool of qualifi ed employees and specialised knowledge

Tax system

Political stability in the target country

National language of the country

Frankfurt New York Dublin

Imp

ort

ance

Basis: 150 companies

Source: TNS Emnid Hessen Investor Survey

Hessen Investor Survey 2015: 95 % of international direct investors evaluate the current situation of their company in Hessen as good, very good or even excellent.

Rank 1 + + +Rank 2 + +Rank 3 +

Excellent15 %

Good40 %

Acceptable5 %

Very good40 %

1. One of the strongest economies of all German states

2. Direct access to the German and European market

3. Germany’s number one airport and central hub in Europe

4. Leading fi nancial and trading centre within the Eurozone

5. Strong industries: automotive, electronics and mechanical engineering, pharmaceuticals, chemicals and life sciences

6. Europe’s leading region for ICT and the world’s leading Internet exchange point DE-CIX

7. Highly-skilled workforce and top location for research and development

8. Available and affordable offi ce spaces and industrial sites

9. People from more than 190 countries and 12,500 international companies

10. High quality of life

Frankfurt ranks fi rst in “German Cities of the Future” (fDi, German Cities of the Future, 2016)

Frankfurt is in 7th place of the most liveable cities worldwide (Mercer, Quality of Living Survey, 2016)

The fi nancial center Frankfurt will emerge as major winner of a Brexit in the areas: “securities trading and settlement”, “corporate banking” and “asset management”. (Center for Financial Studies, CFS Survey, 2016)

“[…] for the moment, Frankfurt is out in front.” (The Guardian, 22/09/2016)

Hessen and Frankfurt – the place to go

10 reasons to choose Hessen

Germany is the top destination for FDI in Europe

Source: EY, European attractiveness Survey, 2016

69 %

43 %

36 %

19 %

15 %

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Ministry of Economics, Energy, Transport and Regional Development, State of Hessen

Hessen Trade & Invest GmbHKonradinerallee 965189 Wiesbaden, GermanyTelephone: +49 611 95017-8203Email: info@htai.dewww.hessen-trade-and-invest.comwww.invest-in-hessen.com

Publisher and EditorHessen Trade & Invest GmbHDr. Rainer Waldschmidt

Layout and Designansicht Kommunikationsagentur

PrintingA&M Service GmbH

October 2016

Image references Cover: mirpic/Fotolia, helmutvogler/Fotolia; p. 2: Brexit: Michael Paccione/Fotolia, Euro symbol: iStock.com/instamatics, Messe Frankfurt: iStock.com/pic4you; p. 3: Tarek Al-Wazir: HMWEVL, map: Jakataka/gettyimages;p. 4: Börse Frankfurt: imago/Michael Weber, FinTechs: vectorone/Fotolia

Welcome to Hessen.

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