Could Amsterdam be the New Financial Capital of Europe?
Could Amsterdam be the New Financial Capital of Europe?21st December 2021
Amsterdam’s prominence in Europe has moved far beyond its reputation as a hub for tourism. In addition to being Europe’s greenest city, Amsterdam is quickly becoming a major financial centre on the international scene. Could Amsterdam be the next financial capital of Europe? Read on to discover why business in Amsterdam makes the Dutch city a serious contender for the title.
When Article 50 was triggered in 2017 and Brexit became an inevitable reality, many financial companies were motivated to reconsider the placement of their European operations. London had for many years been considered the financial capital of Europe but was deemed to have seen the end of its ‘glory days’ earlier this year by Howard Davies, former Governor of the Bank of England. Despite conceding that London would ‘remain Europe’s largest financial marketplace,’ Davies accurately foretold Europe’s desire to find a new ‘city of its own’ to take the title of European financial capital. Indeed, the bank for which Davies is Chair, NatWest, bolstered its presence in Amsterdam preceding Brexit with NatWest Markets N.V. – which is registered in the city, ensuring that the company retains a eurozone presence. However, there are many attributes Amsterdam accumulated prior to Brexit which make it stand out as a financial centre.
Regulatory Versatility and Flexibility
Regulations enabling smooth trading is key to attracting investors and stakeholders to any major city – and this is something that Amsterdam is renowned for. Unlike many of its EU counterparts, Amsterdam goes some way to cutting down the amount of red tape inhibiting investment deals. One example is the Netherlands Authority for the Financial Markets (AFM) and its lenience towards proprietary trading firms – allowing them to trade with institutional investors directly, rather than as clients (a practice insisted upon by most EU countries). This ‘firm but fair’ approach makes Amsterdam a particularly attractive option for traders and investors, and certainly a more appealing financial capital than most European alternatives.
Furthermore, business in Amsterdam is bolstered by the city’s increasingly popular Euronext exchange. Special purpose acquisition companies (SPACs) – companies that acquire start-ups and help them go public – are especially enamoured with Amsterdam’s offering. Indeed, the success of Amsterdam’s Euronext exchange made it the leading city in Europe for SPAC listings in the first half of 2021, following the market’s initial success in the US in 2020. This is only set to improve thanks to the impressive roster of sponsors attracting more investors to commit to SPAC ventures in the Dutch capital – lending greater credence to Amsterdam’s financial capital title.
Another burgeoning market in which Amsterdam holds significant sway is ‘fintech’. Fintech is a relatively new term meaning ‘financial technology’, specifically regarding the ways in which financial service companies integrate technology to enhance their customer user experience. Valued at $7301.78 billion in 2020, it’s easy to see why servicing the fintech market is a sure fire way for a city to establish itself as a leading financial centre. Amsterdam saw multiple leading fintech companies – such as MarketAxess, Klarna, and CurrencyCloud – either expand their existing offices or move their European headquarters to the city in recent years – partially due to the city’s aforementioned flexible approach to fiscal regulations.
But Amsterdam’s surge in fintech investment is also due to the city’s impressive infrastructure. Ideally located within short travel distance of Scandinavia, the UK and much of wider Europe, Amsterdam is served by the impressive Schiphol Airport – which in turn provides regular flights to the world’s leading technology and financial centres. With an infrastructure geared towards international interconnectivity, Amsterdam poses few obstacles to companies seeking to base their headquarters in the city. The designated business district, Zuidas, offers further appeal – with rapidly developing state-of-the-art office spaces and attractive nearby suburban areas building on the city’s reputation as one of the world’s best for quality of life. To top it all off, Amsterdam is home to a world-class talent pool – especially in the tech field. With over a quarter of a million tech workers in the city and a growing graduate pool from the University of Amsterdam, start-ups and relocating fintech organisations alike have all the encouragement they need to move their business to Amsterdam and stake out a presence in the city to secure their spot in the increasingly competitive eurozone market.
Brexit’s impact on the European market changed the way businesses manage their global financial operations – with a more ‘fragmented’, diversified approach to asset placement. With companies wishing to maintain presences in both the UK and the EU, and London still dominating as a centre of trade, Amsterdam won't replace London as a de facto European financial capital anytime soon. But while it would be erroneous to assert that Amsterdam is the financial capital of Europe, the city is certainly the best placed to take financial prominence in the EU.
If you’re considering making the move to the capital of the Netherlands with your business, read our guide to relocating to Amsterdam, or consider the very best selection of city centre serviced apartments for your next business trip.