Germany is on track to weaken labour laws for high-earning bankers as part of a push to attract City firms to Frankfurt following Brexit.
The deputy head of Chancellor Angela Merkel’s CDU party, Volker Bouffier, was among those spearheading the proposal, which was then pushed by its deputy finance minister Jens Spahn during coalition talks with the Social Democrats (SPD), a source told the Press Association.
The move would effectively strip away the rights of employees who earn more than about 180,000 euros (£159,000), making it easier to fire and replace high-earning staff.
It is understood the plans have been agreed by negotiators, but have yet to be formally announced as politicians continue to hash out the final details of the coalition agreement.
Germany has been without a ruling government since the September 24 election failed to deliver a clear majority.
Hubertus Vath, managing director of the Frankfurt Main Finance lobby group, said the plans were undoubtedly driven by an interest in drawing UK-based bankers to Germany.
“As a result of Brexit, banks indicated that they would be transferring more jobs in trading to Frankfurt, if German labour law would be loosened.”
London is expected see a raft of banking jobs relocate to the EU as a result of Brexit (PA)
The proposal would still have to pass through the Bundestag – the German parliament – before coming into effect, but Mr Vath said there was little risk of it being watered down.
“If that loosening became part of the coalition treaty, yet to be finalised, you can consider it is on its way, as this treaty forms the basis of the government’s work.”
UK-based banks and insurers are widely expected to start pulling the trigger on Brexit contingency plans by the end of the first quarter, when the UK will be about 12 months away from leaving the EU.
Germany is set to be one of the main beneficiaries of the exodus, though businesses are also expected to flee the UK for rival financial hubs including Dublin, Paris, Luxembourg and Milan.
US banking giant Goldman Sachs – which employs around 6,500 UK staff – is set to at least double its Frankfurt office to 400 employees through a mix of relocation and local hiring, and has also signed a lease on a yet-to-be-built skyscraper that can house up to 800 workers, with options to take up additional space.
Paris – where Goldman employs around 150 staff – will serve as a dual hub alongside Frankfurt, with additional moves to offices including Milan, Madrid, Stockholm and Dublin.
American peer Morgan Stanley is understood to have plans to move 200 of its 6,000 UK staff to Frankfurt, but is taking a similar approach by bulking up offices in Milan, Madrid and Paris, while Citigroup notified its bankers in July that it may need to create 150 new roles at its Frankfurt offices as well as those in Amsterdam, Dublin, Luxembourg, Madrid and Paris.
JP Morgan, which has 16,000 staff in the UK, will ramp up operations at a number of its EU sites with plans to move up to 1,000 London front and back office roles.
A raft of Asian banks including Nomura, Daiwa, Sumitomo Mitsui Financial Group (SMFG) and Mizuho Securities are also on track to expand their operations in Frankfurt.