- Since Brexit, the top five Wall Street banks have added about 11,000 roles in EU entities as they shift from London-centric models to full local operations.
- ECB scrutiny has pushed banks to avoid “empty shell” EU hubs by building onshore risk management, senior governance, and real trading capability.
- Paris has become the main EU markets hub, drawing major trading teams, but higher costs and rigid labor rules complicate expansion.
- New rules such as CRD 6 from 2027 will further require core banking services to be delivered from authorized EU entities, increasing pressure to localize.
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Since the United Kingdom officially left the European Union in early 2021, major Wall Street firms have undergone a structural transformation, moving from strategies focused on regulatory compliance to full operating models with substantial local presence. Key players such as JPMorgan, Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley have expanded headcount in EU legal entities, often growing departments that were once largely serviced from London. Paris has emerged as the dominant hub for markets activity, though Frankfurt, Dublin, Milan remain significant beneficiaries.
Regulatory pressure from the European Central Bank (ECB) has been instrumental in shaping these changes. The ECB’s desk-mapping review beginning in 2020 identified gaps in local governance, risk management, senior staffing, and non-reliance on cross-border trading activities that simply booked risk back to London. With the introduction of CRD 6, from 2027 further mandates will force international banks to deliver “core banking services”—taking deposits, lending, issuing guarantees—from authorized local entities rather than branches or third-country operations.
While the overall shift has created new opportunities for EU financial centers, not all moves have been smooth. Paris boasts favorable incentives, including tax breaks for incoming expatriates, attracting hundreds of traders and front office staff. Yet its labor laws and cost of separation remain stiff compared to other jurisdictions. Meanwhile, Frankfurt has increased its appeal through internationalization and expanding its talent pool but lags behind in relative speed of growth and centralization compared to Paris and Dublin.
Strategic implications are broad: firms must invest in talent acquisition and retention in multiple jurisdictions, adapt global risk and booking models, and manage costs like real estate and compensation. Regulatory mismatches risk operational complexity and legal uncertainty, particularly with directives like CRD 6 and ECB oversight becoming stricter. EU cities are competing fiercely to offer attractive regimes, but success depends on balancing incentives with regulatory and structural constraints.
Open questions remain around: how firms will manage potential job losses due to automation and AI across EU hubs; whether EU financial centers can create equivalent global clearing infrastructures; how well local regulators will accommodate model approvals; and whether London can retain influence despite diminished pass-through functionality.
Supporting Notes
- The top five Wall Street banks added approximately 11,000 staff to their EU operations over five years.
- Paris has gained around 33,000 new finance jobs since the Brexit referendum (2016); Choose Paris estimates 7,500 of these are due to directly relocated roles.
- JPMorgan Europe SE grew from 562 EU employees in 2020 to 3,570 by end-2024; Citibank Europe Plc rose by ~6,400 to 16,647. Morgan Stanley and Goldman Sachs also more than doubled or quadrupled staff in Paris.
- The ECB’s desk-mapping review evaluated 264 trading desks across international banks, covering €91 billion of risk-weighted assets and €4 billion in net trading income, finding many insufficiently managed locally.
- Under CRD 6 (effective from 2027), “core banking services” must be delivered via authorized local entities within EU jurisdictions.
- Paris offers the impatriate tax regime: up to ~30 % of an expat’s earnings are tax-free, though this breaks when changing jobs; complemented by tight labor laws and high separation costs.
- Prime office space in Paris has risen by ~35 % since 2020 to €1,234/sqm; Frankfurt’s comparable rise was ~10 % to €612/sqm.