Bundesbank chief Jens Weidmann claims London banks will consider Frankfurt after hard Brexit

Jake Cordell
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Frankfurt bridge and skyline
A bridge over troubled waters? German central bank chief issues plea for London banks (Source: Getty)

The head of the German Bundesbank has said Frankfurt will open its arms to any banks or businesses that decide to leave London in the wake of the EU referendum.

Jens Weidmann also warned that if the UK leaves the EU's Single Market - the so-called "hard Brexit" option gaining traction in parts of the Conservative Party - it will automatically lose the precious "passporting rights" which allow financial services institutions to operate across the EU from a base in London.

In an interview with The Guardian, Weidman stated, matter-of-factly: "Passporting rights are tied to the Single Market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area."

The warning comes as Tory MPs launch a new campaign group, Leave Means Leave, calling for the UK to leave the EU's Single Market. During the referendum campaign, Remain campaigners criticised the idea of leaving the EU but staying in the Single Market - the Norway option. It was noted that being in the Single Market meant still abiding by regulation from Brussels, making some kind of financial contribution and having to allow the free movement of people.

Read more: Is a hard Brexit looking increasingly likely?

The group is headed up by Leave.EU, the non-official Brexit campaign, backer and businessman Richard Tice. Within parliament it has the support of long-time Eurosceptics such as Owen Paterson and Dominic Raab, and also boasts Labour donor and businessman John Mills among its supporters.

Foreign secretary Boris Johnson also tied himself to a new campaign last week, Change Britain, which is led by Labour MP Gisela Stuart and designed to put pressure on the Prime Minister to follow-through with quitting the EU.

Weidmann said if the hard-Brexiters get their way the UK economy would suffer, and "of course several businesses will reconsider the location of their headquarters."

Read more: Leaving London will cost £50,000 per bank

He added: "As a significant financial centre and the seat of important regulator and supervisory bodies, Frankfurt is attractive and will welcome newcomers."

It is unclear what role, if any, Weidmann will have in the upcoming negotiations between the UK and the EU. As a former adviser to Angela Merkel and head of the German central bank he carries clout, though will be just one of many politicians from institutions, the other EU members and those inside the Brussels institutions jostling for position. Moreover, his disagreements with European Central Bank (ECB) president Mario Draghi could create friction between the pair if the ECB gets involved with the process of untangling the UK - and the UK's banks - from the rest of the EU.

However, despite the calls for companies to consider upping sticks, Weidmann said he did not "expect a mass exodus from London to Frankfurt."

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