Top executives at the biggest Wall Street banks said French authorities should consider relaxing some elements of the country's strict labor laws to build on Paris' momentum as a European financial center Europe after Brexit.
Citigroup Inc.'s workforce in the French capital has more than doubled to about 400, while JPMorgan Chase & Co. now employs about 900 people in the city. At Morgan Stanley, executives originally expected the quantitative research team in Paris to be about 30 people, but now they hope to expand that to up to 150 people.
But executives warned that they may be hesitant to add large amounts of talent to their centers in France because the country's labor protection regulations limit their ability to largely cut employees if there is a downturn in dealmaking and capital market activity, like this one the case has been the case in recent years.
“We are a cyclical industry, we need to be able to be flexible in terms of headcount,” Emmanuel Goldstein, Morgan Stanley's France head, said at an event hosted by Bloomberg along with executives from JPMorgan, Citigroup and Goldman Sachs Group Inc. organized. “It doesn't mean laying off half the people. This is simply an adjustment to the workforce, but it must be able to be implemented under good conditions and within a reasonable time frame.”
Their warnings come at a time when cities across Europe are vying to have more financial services companies move their high-paying jobs and glitzy trading floors to their city centers. Amsterdam, Frankfurt, Dublin, Milan, Madrid and Warsaw are also seeing an increase in the number of bankers walking their streets.
“If you ask a head of a global business unit in one of our banks if that person wants to massively increase the number of employees in France, they will answer: 'Why France?' I will grow it in Hong Kong or choose London. At this point, I will go for anything,” Goldstein said.
Paris has become a financial center in continental Europe in recent years, attracting banks and hedge funds seeking access to the European Union after Brexit. The British vote forced the biggest Wall Street banks to adjust their operations to ensure they trade European assets – from government bonds to interest rate products to stocks – within the 27 countries still in the European Union.
Soon, global hedge funds like Citadel and Millennium Management opened offices across the city, and Wall Street's biggest firms set about moving and hiring hundreds of traders for their bright new trading floors in Paris.
“The labor market in France is more complicated, more flexibility is important for all of us,” Marc d'Andlau, co-head of Goldman Sachs' Paris office, said at the event. “If you significantly increase the number of employees, this becomes more and more important.”
The comments come as the world's largest banks have cut thousands of jobs in recent quarters due to a lack of dealmaking and capital market activity.
'Not so easy'
France is currently working on a new plan to further strengthen the attractiveness of Paris as a financial center of the European Union. These moves have prompted other companies from Asia, the Middle East, Canada and Australia to consider moving their operations to Paris.
“In the moment of Brexit, it was not a given that Paris would win,” Cecile Ratcliffe, Citigroup’s chief country officer for France, said at the event. “What made the difference above all was the pool of talent, the pool of talent in France that came from the big French banks.”
The country's schools have also helped boost local talent pools, Ratcliffe said. Two Frenchmen Universities According to Bloomberg, they are among the 20 best business schools in Europe.
Still, persuading dealers to move from their London offices to Paris hasn't always been easy, executives said. It didn't help that some rival banks initially poached employees with the promise that they wouldn't have to move to continental Europe.
“It wasn't so easy to move the kids, find the nanny, etc., people were reluctant,” says JPMorgan's Alexis Sztejnman, who leads markets and platform sales for France, Belgium and Luxembourg. “Now that people have adapted, they are actually very happy in Paris.”