Munich's mountains and tech tempt big banks from Frankfurt

Software AG

19/02/2024 15:38

By Alexander Hübner and Emma-Victoria Farr
       MUNICH, Feb 19 (Reuters) - Munich is starting to steal
some of German financial hub Frankfurt's limelight as foreign
banks flock to the southern city, which on a clear day has views
of the Bavarian Alps.
    The appeal lies in Munich's high proportion of DAX  .GDAXI 
companies and tech start-ups, large insurers and financial
investors, while the nearby mountains add to its allure.
    Firms such as Goldman Sachs and Morgan Stanley have been
drawn by big German companies such as Siemens  SIEGn.DE ,
Allianz  ALVG.DE  and BMW  BMWG.DE  being based around Munich,
while their bankers also value the quality of life on offer.
    "Many decision-makers work and live here, it's a city where
you can live well," said Dietrich Becker, head of Europe and
partner at Perella Weinberg  PWP.O , adding that Munich had the
highest concentration of clients in Germany.
    The U.S. investment banking boutique was a pioneer in
choosing Munich for its German base, opening its office in 2020.
    "In London and Paris there is a high concentration of
companies and decision-makers, in Germany that is more spread
out, people are constantly on the move," Becker told Reuters.
    Along with big established industrial and financial names, 
EQT  EQTAB.ST  and General Atlantic are among the largest
technology investors present in Munich. 
    And there are also aspiring German software companies and
many European subsidiaries of U.S. technology firms.
    Next month, Goldman Sachs  GS.N  will be the first of the
major investment banks to establish a presence in the Bavarian
state capital when it opens a Munich office.
    This will be Goldman's second office in Germany after
Frankfurt, where it has around 400 bankers, with its Wall Street
rival Morgan Stanley  MS.N  set to follow suit in the summer.
    "We will be in Munich with a team of around 30 bankers, some
of whom will move from Frankfurt but also some from London,"
Wolfgang Fink, head of Germany and Austria and chairman of
continental Europe at Goldman Sachs, told Reuters.
    "We want to be where our clients are," said Fink, adding
that Munich was becoming "more and more international".
    
    TECH TEAMS
    In the German tech sector, Goldman Sachs and Morgan Stanley
are among some of the most sought-after investment banking
advisers, alongside fellow U.S. giant JP Morgan  JPM.N .
    "In terms of market value, there are around one third of DAX
companies sitting here and more than ten 'unicorns', i.e.
start-ups with a valuation of more than one billion euros," said
Tammo Buennemeyer, a technology specialist who will help
establish Morgan Stanley's team in Munich.
    Goldman Sachs, meanwhile, says it will move the team of
Tobias Koester, which covers financial investors, alongside its
technology, telecom and media bankers (TMT) under Macario
Prieto, head of TMT banking EMEA.
    "In the long term, this regionalisation is also a result of
Brexit, after which more business moved to the continent for
regulatory reasons," said Fink. 
    Frankfurt, Paris and Amsterdam fought to be the largest
beneficiary from Brexit after Britain left the European Union,
with Munich proving to be an unexpected beneficiary. 
    "The European continent as a whole has gained importance due
to Brexit," said Buennemeyer. 
    Perella Weinberg partners Stefan Jentzsch and Johann von
Wersebe are based in Munich, while former Deutsche Bank
 DBKGn.DE  CFO Marcus Schenck moved from the advisory boutique
to Lazard  LAZ.N  two years ago, but stayed in Munich.
    And another U.S. investment banking boutique, PJT Partners
 PJT.N  plans to open an office in Munich soon, people with
knowledge of the matter told Reuters.
    Most bankers agree, however, that Munich is unlikely to
rival the more internationally-open Frankfurt as Germany's
banking capital, with only a fraction of them employed in the
Bavarian state capital for now. 
    "Viewed from other European countries, Munich is certainly
attractive," said Fink. "But at the start of a career, many
colleagues feel at home quickly in Frankfurt."  

 (Reporting by Alexander Huebner and Emma-Victoria Farr; Editing
by Alexander Smith)
 ((emma-victoria.farr@thomsonreuters.com;))