(Bloomberg) -- France is working on a new plan to bolster the attractiveness of Paris as a European Union finance hub, as President Emmanuel Macron seeks to build on an initial wave of relocations after Brexit.
The government plans to amend some rules and introduce measures as early as next year, people familiar with the plans said. Considerations are at an early stage and the exact nature of the changes isn’t yet clear, they said, asking for anonymity to discuss internal deliberations.
The new push aims to leverage Paris’s success in attracting major US banks and hedge funds such JPMorgan Chase & Co. and Millennium Management after Brexit. Their shift from London brought thousands of jobs and burnished Macron’s reputation as pro-business reformer capable of transforming France’s slow-moving economy.
After the first wave of relocations, the government is now keen to develop the whole value chain in financial services, officials said. Macron is also looking to reboot his broader agenda as unemployment picks up and the economy risks falling into recession.
“We will stick to our strong commitment and carry on unfolding competitiveness reforms to attract new financial firms in Paris,” said Finance Minister Bruno Le Maire.
With the package of measures still at an early stage of consideration, the government hasn’t yet decided whether legislation would be required. Any bill would face uncertainty after Macron lost his parliamentary majority in 2022 elections, although the government can use powers to bypass votes.
That leaves little leeway for major changes. Banks see a possibility for minor adjustments to make firing highly-paid individuals cheaper, people said. A 2019 law already reduced the severance employers have to pay for material risk takers, but some institutions are calling on the government to extend this measure to other top earners, one of the people said.
Some financial institutions are seizing the opportunity to lobby for other changes, including adjustments to France’s already relatively advantageous system of tax exemptions under the so-called “impatriation” regime, people said. A number of banks want benefits to be transferable when staff change employers within France to make it easier to poach talent, they said.
However, the government instead seeks to build on a reputation for stability since Macron pushed through a series of pro-business overhauls and changes to make labor laws more flexible when he took office in 2017.
“On the labor market itself, we’ve done some pretty significant reforms,” said Christian Noyer, a former governor of France’s central bank who heads a government task force promoting Paris as a financial center. “We could look for adjustments, but in the main part, it’s above all important to not call into question the changes that have been made.”
Still, with the possibility of more measures to make the city attractive, a number of firms from Asia, the Middle East, Canada and Australia, are contemplating moving business to Paris, according to some of the people. National Australia Bank Ltd., which set up its Paris office last year, says that outpost helps it support growing demand from its clients operating in the EU.
“NAB has held a significant presence in Europe for decades,” said Nicola Jolley, chief executive officer of NAB Europe. “We are partnering with a large and growing number of investors and clients as they become more active in the region.”
Some lenders are contemplating shifting their EU legal entity to Paris or setting up research units in the French capital to tap its pool of quantitative trading talent, Noyer said. Morgan Stanley established its unit in 2022, and now employs 81 people in its research center.
Several US hedge funds are in the process of getting their license with the country’s markets regulator Autorite des Marches Financiers, one person said.
AMF declined to comment.
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