(Bloomberg) -- The shift of jobs and assets to Paris after Brexit will accelerate this year, providing Europe with an opportunity to strengthen its own financial infrastructure, according to Bank of France Governor Francois Villeroy de Galhau.
Financial institutions had transferred about 2,500 jobs and 170 billion euros ($206 billion) worth of assets to France as of the end of 2020, with further relocations expected, Villeroy de Galhau said in an online speech on Tuesday.
The protracted departure of the U.K. from the European Union has triggered a tide of businesses moving from London to the continent’s main financial hubs, he said. In 2019, The European Central Bank estimated that 24 banks will settle in the bloc and a total of 1.3 trillion euros in assets will eventually move from London to the euro area.
European countries have been promoting their own financial centers to attract businesses leaving London. Germany’s Bundesbank said 400 billion euros in assets have been transferred to the country as of the end of 2020, a figure that is set to increase after Morgan Stanley shifts 100 billion euros over the coming months.
Villeroy de Galhau said the U.K.’s departure and post-pandemic recovery plans provide an opportunity for the EU to strengthen its own market structures to ensure its financial autonomy. In particular, the bloc should reinforce capabilities for clearing, an area long dominated by London. The economic recovery from the pandemic also a chance to improve the existing financial system, he said.
“It is now or never that we should seize the double opportunity of Brexit and the reconstruction to make a capital markets union,” Villeroy said.
Villeroy welcomed the ECB’s decision to allow banks to partially resume dividend payments, but said it’s only a very cautious first step that will allow them to attract investors and raise capital. The low returns on equity among French banks, roughly half the level of their U.S. counterparts, remains a challenge for the sector, he said.