Fortune - USA (2019-12)

94

FORTUNE.COM // DECEMBER 2019

AMSTERDAM’S BREXIT BOOM

of market development for AM Best, the insur- ance rating agency headquartered in Oldwick, N.J. Last year, AM Best moved its EU headquarters from London to Amsterdam, taking space in the high-rise Zuidas financial center on the southern edge of the city, a 10-minute train ride from Schiphol Airport. “About one- third of our business has moved from London,” says Amsterdam manager Angela Yeo, as she sips a fine-brewed espresso in the lobby café of cutting-edge NoMA House, the company’s new digs. She describes NoMA as a hub for “Brexit refugees”; its anchor tenant is Kraft Heinz, which opened a “center of excellence” last year with 450 people. Few financial firms have abandoned Britain entirely, and many keep most of their Euro- pean staff there. MarketAxess has 10 staffers in Amsterdam, while 120 remain in London. AM Best has 70 people in London and about a dozen in Amsterdam. But if and when

Brexit becomes official, more of their business will likely emanate from Amsterdam, and the staffing balance could eventually shift further—along with the industry’s center of gravity.

AMSTERDAM BOOSTERS INSIST they have done relatively little to actively attract newcomers. The Dutch did not bend their laws or tax code for interested companies. Many banks, for exam- ple, have bypassed the Netherlands for Paris, Dublin, and Frankfurt, in part because Dutch law caps bankers’ bonuses at 20% of annual base salary, compared with 200% in London and 100% in other EU countries. And while Frankfurt and Paris ran massive campaigns to promote their cities to London-based executives, Amsterdam leaders almost regarded it as unseemly, says Hugo Niezen, senior manager of foreign investments for amsterdam inbusiness, the city’s promotional organization. “If we bad-mouth our competitors, it will not make us look good,” he says. Still, for at least one organization, the Dutch turned on the charm. The morning after the 2016 Brexit vote, Noël Wathion woke up in London with more reason than most to be anxious. Wathion is dep- uty executive director of the European Medicines Agency (EMA), a bureau analogous to the U.S. Food and Drug Administration that had been headquartered in London since 1995. Because it’s an EU entity rather than a private company, under Brexit, the EMA would have to leave Britain entirely. Staffers “were devastated,” recalls Wathion, a Belgian who had lived in London for 20 years. “They had built their lives in the U.K.” The Brexit vote effectively forced the EMA to shut down its headquarters—triggering what became the single biggest job-related move resulting from Brexit. (It also cost the agency $650 million on its London lease.) For the rest of Europe, the EMA was a giant prize to be fought over. Whichever city won could inherit more than 900 high-earning newcomers. It would also have the chance to lure an influx of pharmaceutical and biotech companies, which must work closely with the EMA to get drugs approved. The Netherlands threw itself into an all-out fight. The govern- ment offered a $330 million headquarters in Zuidas, built to EMA’s specs. It noted that tourist-friendly Amsterdam had hotel space for the hordes of specialists who would visit. It produced a video in which Dutch children greeted viewers in flawless English, while a narrator reassured EMA staff in London that “after all, we are not that different. We also have a very stylish queen and enjoy fish and chips.” In 2017, the final vote by EU foreign ministers resulted in a tie between Amsterdam and Milan. To the fury of Italian politicians, the winning city was drawn out of a bowl—and had lots of canals. The EMA officially set up shop in Amsterdam this March, and its arrival has already paid off for the Netherlands. Eight health care or life-sciences companies, including Japanese biotech firm Rakuten Medical, opened offices in the city last year, Amster- dam officials say, presumably to be in proximity to the EMA, bring- ing with them hundreds of jobs. DuPont, British med-tech company Aparito, and South Africa–based Synexa Life Sciences have all opened European headquarters in Leiden, a short train ride away. Walk—or cycle—around Amsterdam, and it’s easy to see why “Brexit refugees” would choose it as their sanctuary. Its calm atmosphere is in striking contrast to much of Europe, especially

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AMSTERDAM

PARIS LUXEMBOURG

FRANKFURT

DUBLIN

LONDON

SOURCE: NEW FINANCIAL

MIGRATION OF LONDON-BASED DIVERSIFIED

FINANCIAL FIRMS

200 MILES

24

CO

MP

AN

IES

(^21)

18 6

4

MAGNETS FOR FINANCE

A total of 92 “diversified financial” companies— a category that includes brokerages, trading exchanges, and financial-data firms—have moved operations out of the U.K. since the Brexit vote. Am- sterdam has attracted 24, more than any other city.