The French capital Paris, long derided as offering a philosophical, artistic milieu but shunning business, is making a comeback as a financial centre for asset management and wealth firms.
An increasingly finance-friendly environment under the presidency of former Rothschild banker Emmanuel Macron, has led to a more optimistic atmosphere among the city’s often lugubrious investment community.
Sipping a café noir among the chattering mid-morning throng at Le Vaudeville Brasserie, opposite the imposing Palais Brongniart, where the city’s stock exchange was once housed, Arnaud de Bresson, chief executive of Paris Europlace, talks about the various initiatives which this promotional body has been involved in. Post-Brexit jobs have recently been added by the likes of Schroders, Fidelity, JP Morgan, Wells Fargo and Bank of America.
“Asset management is our main pillar, it is double the size of Germany’s industry, number one in continental Europe and not far off that of London,” he beams, alluding to the success of leading local players such as Amundi, Axa Investment Managers, BNP Paribas Asset Management, Natixis Investment Managers and more recently La Française, a real estate specialist catapulted to major player status after impressive strategic acquisitions, now managing $75bn.
La Française entered a partnership with Canadian Pension Plan Investment Board in early 2019 to invest in the Grand Paris project, described as the largest urban renewal programme of the 21st century. Commentators say this is evidence the French finance industry has strong faith in the future of its own capital city as a business hub.
The future, says Mr de Bresson, will see a focus on research, contrasting with the niche specialisations of rival centres such as Dublin’s back office base and Luxembourg’s expertise in establishing legal entities and distribution hubs for fund houses. “Paris is a location for management and research teams – that is our forte.”
This strength has been boosted, he says, by fiscal incentives, including the CIR tax credit for research activities, which the financial sector has particularly benefited from. But rather than resting on the laurels of its expanding homegrown fund houses, Paris is now trying to attract new players from elsewhere, including dissatisfied investment start-ups from a crisis-hit UK.
To this end, Mr de Bresson’s unit has set up a specific fund dedicated to seeding “younger, innovative asset management firms willing to relocate to Paris”. This year, they will be closing the vehicle’s third compartment, which has raised €300m ($337m) of the €800m total. The target is to invest €1bn in these boutiques by 2021.
Despite reports to the contrary, there is no joy among Parisian high financiers that the UK is leaving the EU. Most have fond memories of working in London during their careers among a massively skilled Gallic expatriate community and are still regular Eurostar travellers. French firms are well represented in the City. But at the same time, Paris recognises Brexit will herald a realignment which will spark change and opportunity.
“In the context of Brexit, Paris is very well positioned to attract international companies,” were Mr Bresson’s opening remarks at a summit on digitalisation of wealth management at the Palais Brongniart, hosted by the EDHEC Research Institute.
“Since the election of Emmanuel Macron, Paris benefits from a much friendlier business environment, more flexibility in labour rules, fiscal reforms and taxes to make Paris today more competitive in comparison to other European centres,” he says.
This is not gloating by any means. “Brexit is bad news for London and for Paris,” admits Mr de Bresson. “But Brexit will also give opportunities to our financial centre. It will lead to a rebalancing of financial market activities around Europe.”
But there are downsides to life in the French capital, not least the ‘gilet jaune’ protests which have plagued the city centre over recent months. “We are not proud of the yellow vest events,” says Mr de Bresson. “These indicate to us that France is just like other European countries, confronted by questions about the way its regions will develop in the future.”
French financiers say they have “priced in” the disruptions to their weekends, obtaining updates each Saturday morning from the Paris gendarmerie and carefully planning itineraries to avoid any commotion.
“If you look at Europe’s financial centres, it’s a battle of the Ugly Sisters, and Paris is the prettiest of a bad bunch at the moment,” says one veteran financier with experience of working in three continents. “There are still questions of whether Macron can deliver economically, but he is bringing in young blood and French firms are restructuring their own staff to reflect this. The political class is looking more like the civil society which elects it and this can only be a good thing.”
