Global Banks May Add 1,000 Jobs in EU on New Rules, Lobby Says

(Bloomberg) -- Global banks are expected to add or move as many as 1,000 employees to their operations in the European Union because of new rules that will take effect in 2027. 

A regulatory update known as CRD6 means US and other foreign banks will probably have to increase their EU headcount in both client-facing and back office roles like compliance, said Oliver Behrens, president of Frankfurt Main Finance, a lobby group.

He cited estimates that banks operation in the region will also transfer as much as €350 billion ($409 billion) of financial assets like loans and merger financing to the bloc. 

International banks, who long-served EU clients from London, expanded operations on the continent after the 2016 Brexit referendum severed many ties with the region’s financial capital. European authorities have steadily pushed banks to ensure that EU-related risks are managed locally, yet the latest regulatory twist may also shift financial heft within the bloc.

In addition to restricting lending from outside the EU, the new directive is intended to harmonize the way that individual countries regulate the local operations of foreign banks. 

That creates an opportunity for so-called third-country banks, particularly from the US and UK, to review the set-up of their legal entities in Europe, Frederick Lacroix, a lawyer at Clifford Chance’s financial services and asset management practice in Paris, said in an interview.

Several banks picked Frankfurt, which is home to the European Central Bank, for their formal EU headquarters while basing many traders and bankers in Paris. Lenders also expanded in Amsterdam, Dublin, Luxembourg and Milan.

“Some Anglo-Saxon banks have relatively small headquarters in Germany compared to a significant branch in Paris with far more employees and business activities,” said Lacroix. After the implementation of CRD6, national regulators may scrutinize banks that expanded in their jurisdiction while having their EU hub in another country, he said.

According to Behrens, Germany continues to be attractive to banks thanks to its political stability compared with countries such as the UK and France. How the country opts to implement CRD6 will help determine whether it benefits, he said.

“We shouldn’t pursue a gold-plating of the standards,” Behrens said, “but rather look at how to find a balance between good regulation and practical implementation.”

--With assistance from Arno Schütze.

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