FAZ.NET, 30 January 2002

Financial centres

World-class city on the river

By Jens Meyer


World-class city on the river Main By Jens Meyer Frankfurt likes to see itself as one of the world's great cities. After all, it has Europe's highest bank towers, and its hideous international airport has as many planes starting and landing as its only possible competitors, Paris and London. When the decision was taken to site the European Central Bank in Frankfurt, the region succumbed to megalomania. Even the commanding position of London as Europe's most important financial centre seemed to be placed in doubt.

But after a while, sanity returned. In the horse-trading that surrounds Europe's future leading stock exchange, the Deutsche Börse has fallen behind in the running after some early successes and the banks too have pulled in their horns. Frankfurt is still Germany's most important financial centre, there is no doubt of that, but on the international stage, it simply cannot stand comparison with London. Where the action is really at has become painfully clear in the discussion about the future of Deutsche Bank.

Frankfurt is still in the premier league

In the very hour when regional pride is most deeply wounded, an Anglo-German research team has published a study which is balm for the weary Frankfurt soul. Things don't look as bad for Frankfurt after all. The researchers have elevated the city to 14th place in a table of the world's most networked cities, putting it in the first division of globalised cities and in the same class as Milan, Tokyo, Sydney or Sao Paulo. Outright leaders in a class of their own, admittedly, are London and New York.

Starting from a definition of a "world city " as part of a worldwide city network, the researchers led by Professor Peter Taylor have examined how much of a presence the actual network creators, the global service companies, have in the various cities. Whereas in London 99 of the top 100 companies identified by the researchers came from the banking, insurance, corporate counselling, advertising and accounting sectors, it is still the case that 70 of these firms have offices of their own in Frankfurt.

"The war is over"

The qualitative basis of the study is provided by a corpus of interviews held in parallel in Frankfurt and London in 2000 and 2001 with high-ranking decision-makers of these companies and other institutions. The study comes to the conclusion that corporate networks are far more likely to promote cooperation than confrontation between the two cities. "Good news -- the war is over," observed Ray Cunningham of the Anglo-German Foundation, which commissioned the study.

The strengthening of the one location need not necessarily be at the expense of the other; this was not a zero-sum game. "What is good for London is also good for Frankfurt and vice versa," argued Taylor in defence of a more relaxed view of the supposed rivalry.

Wimbledonisation of London

Contrary to the hopes of Frankfurt, the introduction of the euro has not in the researchers' view led to a loss of significance for London, which remains indisputably Europe's most important financial centre -- even though Great Britain, in the banking sector at least, has hardly any global players of its own to show. The phenomenon of being a meeting-place for the world's elite without star players of one's own is described by the researchers as "Wimbledonisation".

They see the rise of London to be Europe's most important financial centre and one of the undisputed great cities of the world as due to a succession of favourable circumstances. These include language, history and culture, making the city on the Thames seem an ideal place for the European headquarters of expansion-hungry American investment banks. Then there is the high concentration of specialist knowledge and networks, more decisive for many companies than the geographical proximity to their customers.

From that point of view Taylor sees it as only logical that Deutsche Bank, like other German banks, should increasingly concentrate its international business in London. He offers a parting crumb of comfort: "In the end Frankfurt will benefit too."

Text: @mey