(Bloomberg) — In his office in the heart of the upmarket 8th Arrondissement of Paris, attorney in labor law Bruno Gambillo has been receiving a steady stream of traders, investment bankers and analysts. Most of them are foreigners, laid off from international banks and investment funds and looking for help navigating France’s arcane employment rules. Gambillo gets a 10% success fee if he’s able to negotiate a bigger severance.
Most Read from Bloomberg
“Americans, English, Swiss, or Germans are now knocking on my door,” said Gambillo, who for the past three decades has defended workers after they’ve been fired or made redundant, from factory staff to insurance executives. “In recent months, some major foreign financial companies in Paris no longer have the same discomfort as before to proceed with individual or economic layoffs.”
Since last summer, international banks in Paris have quietly shelved expansion plans that would have added, in total, hundreds of new roles. Morgan Stanley Chief Executive Officer Ted Pick told Les Echos last May the bank expected to increase headcount in France to about 500 in the near future. While the bank is moving toward that figure this year, it has deferred making longer-term expansion plans pending clarity on the political environment, according to a person familiar with the situation. Morgan Stanley declined to comment.
Some banks have begun small-scale layoffs. Last month, Bloomberg reported that JP Morgan had dismissed nine workers in Paris, including traders, citing “economic reasons.”
While each company has its own reasons, executives say privately that political instability, higher taxes and economic malaise are the driving factors. Those stem largely from President Emmanuel Macron’s unexpected decision to call snap elections last year. Since then, France has had three governments. It took months to agree a national budget, which, once passed in February, included temporary tax rises for the largest companies and highest earners in the country, a new levy on share buybacks, and a higher tax rate on financial transactions. Economic activity has slowed, and the public deficit has risen. After years of building its role as Europe’s post-Brexit financial center, Paris may have peaked.
“It was a cold shower for the financial sector when Parliament was dissolved last summer,” said investment banker Stephane Zeghbib, partner at independent boutique Altamoda and former vice-president of Morgan Stanley France. “Many players started to tell themselves that this was not the time to make strategic decisions in France.”
Brexit Benefits
Brexit gave Paris an unprecedented opportunity to establish itself at the heart of European finance. Macron, himself a former Rothschild investment banker, promised to simplify France’s legal and fiscal frameworks and cut some taxes on businesses. New international sections were established at the Paris Commercial Court and the Paris Court of Appeal to handle financial contracts governed by UK law. Individual wealth taxes were slashed. And transferees were able to rely on the country’s “impatriation” regime, under which workers relocating to France were granted tax benefits for eight years.
Banks took the bait. Between 2017 and 2023, the financial industry added 25,000 roles, taking the sector to levels only seen before the 2008 financial crisis, according to data from the French National Institute of Statistics and Economic Studies. Bank of America had 70 staff in Paris before 2019, and today has 650. JP Morgan now employs almost 1,000 people in Paris, up from 250 just before Brexit. Morgan Stanley has grown from 150 people in 2021 to 450. Goldman Sachs Group went from 170 staff in 2019 to more than 400 today. Citigroup more than doubled its workforce in the country, from 160 in 2017 to around 400 people, and added a second trading floor in 2023.
The bank still has space in its Paris offices to increase its headcount to 600, but despite a strong trading year in 2024, “the recent increase in the tax on financial transactions makes the country a bit less attractive,” said Cecile Ratcliffe, head of Citigroup in France. “While Paris has won this post-Brexit battle because of President Macron’s attractiveness measures and extensive talent pool, too much tax uncertainty would put a damper on the development of the big banks.”
It’s unlikely that headcounts will fall rapidly. There’s a chance that France will resolve its political issues and the boom will start again. Many of the draws of Paris — a strong talent pool, good schools, an attractive cultural scene and proximity to London — remain unchanged, setting it apart from other aspiring financial centers in the EU.
But at law firms and consultancies, requests for advice are piling up, as banks and other financial companies try to figure out how to respond to the political shifts. “Banks hate uncertainty,” Florence Esmoingt, people advisory services leader for financial services at EY France, said. “Some of our customers, American banks, still hadn’t filed their strategic plans for the country in January.”
Headhunters say that business has slowed considerably since the days they spent trying to lure top talent from BNP Paribas or Societe Generale over to their American rivals. “We’re seeing a hiring freeze that doesn’t want to say its name at many of the big foreign banks in Paris,” said Ilann Boukais, senior manager at the British recruitment company Robert Walters. “The few search requests we’ve been receiving lately are for junior profiles, as firms are less willing at the moment to put as much money on the table as they used to.”
Boukais said that there’s been a real slowdown in recruitment of investment bankers. Regulatory talent, he added, remains sought-after.
It isn’t only American banks that are slowing down, or reducing their staffing levels.
British bank Barclays announced it was delaying the planned move of its EU headquarters from Dublin to Paris until 2027 at the earliest, putting it at least two years behind schedule. Barclays France CEO Raoul Salomon said in an email sent to Bloomberg. “France remains a good place to do business. The work we’re doing for French clients is growing and we continue to see exciting opportunities to help French clients domestically and internationally.”
HSBC, which intends to wind down some of its investment banking operations in Europe and the UK, is planning to cut parts of its French workforce, including some in its M&A teams, people with knowledge of the matter said. An HSBC spokesperson said that they had no comment “at this stage,” adding that any “if they did” have plans, they would first be shared with staff representatives and employees.
Daiwa-owned investment bank DC Advisory said in January it will shut down its Paris office by the summer, while keeping its offices in London, Frankfurt and Milan.
Private equity companies have also reduced their headcount, as dealflow dries up. Swedish private equity firm EQT, which opened its office in the country in 2020, recently let one partner in Paris go, according to people with knowledge of the matter. Permira, which is not planning to close its Paris office, has moved at least two employees from France back to its headquarters in London, according to people familiar with the matter. Paris-based Tikehau co-founder Antoine Flammarion told Bloomberg last month that the firm was planning to invest less in the country and to shift some of its Paris staff abroad.
“Among LBO players, for whom the pipeline is low, we’re starting to see a few breaks-up or exits from corporate advisers in Paris,” says Hélène Lefebvre, a Paris-based partner at the law firm Fieldfisher.
Permira declined to comment. An EQT spokesperson said that the company continues to be very active in France.
Legal Troubles
Reducing headcount in France is still relatively complex and expensive. The law requires an employee representative organization to be present if a company wants to let two or more employees go in a short period of time, or reallocate employees from one team to another. Since last July, it has been slightly easier to fire traders, as companies are now allowed to exclude performance related bonuses when calculating severance packages for “material risk takers.” But cutting significant numbers of staff could be difficult.
“Some foreign financial players who have doubled or even tripled their workforce in Paris in recent years are discovering that they have less flexibility today because of the size of the operations they’ve built,” says Emmanuel Bénard, who heads the Paris office of law firm Orrick. “This French reality is one of the elements that are weighed up today during arbitrations between Paris and other European capitals.”
Whether there is an alternative to Paris within the European Union remains an open question. The city has a highly-skilled workforce and a large pool of companies that are candidates for cross-border mergers or financial transactions.
Recruitment firms say they have seen a few bankers and traders departing Paris for London, Luxembourg or Dubai.
The new German government’s pledge to spend hundreds of billions of euros on defense and infrastructure could draw banks to Frankfurt in search of deals. Many of the dozens of people that Bloomberg spoke to cite Milan as a potential hub. But neither city can compete on the social infrastructure that the financial industry needs to attract talent.
“Beyond the political and economic considerations from one country to another, one of the most limiting factors in judging a country’s attractiveness is whether it has enough schools to accommodate the families of bankers who are planning to move,” Altamoda’s Zeghbib said.
French schools opened up hundreds of multilingual places around Paris after the Brexit referendum to accommodate expatriate families. Schools in the academic region of Versailles to the west of Paris — home to one of the oldest multilingual schools in the region, the Lycee International, which started as a school for children of NATO officials — now have 106 international classes with English, Chinese or Arabic as languages from kindergarten to high school, according to data the Ministry of Education sent to Bloomberg.
“Probably 70% of our expat or repatriate students today in our IB classes have at least one parent working in the financial sector,” says Jim Doherty, executive president at Ermitage international school in the wealthy Paris suburb of Maison-Laffite. While bilingual school places in Paris are close to capacity, Doherty said, “its school infrastructures for expats are still way bigger than what’s available in Milan.”
Macron’s government has tried to maintain a sense of business as usual for the financial industry since the summer.
Speaking at a conference this week, Finance Minister Eric Lombard said that the government is still working to “strengthen the environment to make sure Paris stays competitive for financial companies,” adding that there is “more work ahead of us in regards to the transformation of our social and labor system.”
People with knowledge of dealings between the banks and the administration say that key government decision makers have made themselves accessible to the industry. During an AI summit in Paris last month, Macron rolled out the red carpet for Citigroup CEO Jane Fraser and JP Morgan head Jamie Dimon.
But Macron has been left with little power over domestic politics, because he is facing a hung parliament with no majority to back his government’s laws. France also faces a rising bill for defense, as Europe adjusts to threats from Russia and the possible withdrawal of American security guarantees over the continent. Earlier this month, Lombard backed extending an effective minimum tax rate on the ultra-rich as a way to boost defense spending as the government wrestles with a soaring deficit.
Those from the first wave of bankers who came to Paris after Brexit also now face a looming deadline. Once their eight-year impatriation deals run out — for some, at the end of this year — they will face higher tax bills, and may expect their employers to compensate them for the shortfall. Macron had likely been betting that, by the time that happened, Paris would have already cemented its place at the heart of European finance.
(Corrects third paragraph to remove reference to Morgan Stanley planning to add 100 staff.)
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.
