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Bankers Told No Fly-In, Fly-Out Hub in Frankfurt After Brexit

  • Bundesbank official warns against race to the bottom on rules
  • ‘Economic sanity’ may not prevail in EU-U.K. talks, he says
Skyscrapers stand in the financial district as commercial and residential property is seen on the city skyline in the financial district in Frankfurt, Germany, on Sunday, July 3, 2016. The British seat at the European Union summit had been empty for less than 24 hours before leaders from France and Germany were haggling over one of the U.K. economy's crown jewels: the business that facilitates trading in euro-denominated derivatives.
Photographer: Krisztian Bocsi/Bloomberg
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Banks choosing Frankfurt for their licensed European Union hub after Brexit will have to set up full-scale operations in the country, not brass-plate offices with bankers commuting from London, according to German central bank Executive Board member Andreas Dombret.

“We will not accept any empty shells or ‘letterbox companies,’ where the business effectively continues to be done out of London,” Dombret said in a speech in the U.K. capital on Friday. This includes “fly-and-drive banking, where bankers fly in daily from London, or ‘dual-hatting,’ where transactions are booked on the EU subsidiary but in fact executed in London.”