Just months after Britain voted to quit the European Union (EU), the first financial start-ups are packing up and moving to the capital of the continent's biggest economy - Berlin. "Brexit is one of the main reasons we chose to leave the United Kingdom," said Mr Michael Gastauer, chief executive and founder of WB21, a payment service provider.
Rather than wait out the likely long-drawn negotiations over Britain's new relationship with the EU, WB21 last month simply moved its European headquarters to Berlin, where it will create 200 new jobs, file for a banking licence, and invest up to €50 million (S$76.4 million).
It is one of three fintech firms that have moved from London to Berlin since the June 23 referendum, and more may follow.
Investments in Germany are gathering pace. The country attracted US$186 million (S$259 million) in fintech funding capital in the second quarter - 80 per cent more than Britain's US$103 million, KPMG said. Brexit could accelerate that.
"Berlin provides the ideal eco-system for our industry in Europe. We have decided to build our EU banking structure out of Germany, given that the legal framework and integration within the EU is more stable than in the UK," Mr Gastauer said.
WB21 is a fintech company, The industry uses technology to develop innovative financial services such as online trading or money transfer services. Worth about €8.9 billion, the UK fintech market dwarfs Germany's €2.4 billion market, according to an estimate this year by Ernst and Young.
But investments in Germany are gathering pace. The country attracted US$186 million (S$259 million) in fintech funding capital in the second quarter - 80 per cent more than Britain's US$103 million, KPMG said.
Brexit could accelerate that.
At a press conference announcing the move, Mr Gastauer spoke in particular of Germany's role as a "cornerstone of the European Union" - a crucial point as it meant that the economic powerhouse was least likely to ditch the bloc.
Key to Mr Gastauer's decision to apply for a banking licence in Germany is the issue of so-called "passport" rights that allow financial firms to operate freely across the European single market. Financial firms in London could potentially lose these rights. In Germany, major cities are jostling for a share of the companies moving on from the UK.
Berlin has overtaken economic powerhouse Frankfurt as a magnet for tech start-ups. With its relatively affordable living costs and vibrant creative scene, the capital has attracted a strong pool of qualified workforce for fintech start-ups. It is now home to around 70 such companies, while Frankfurt has only half that number.
Mr Stefan Franzke, who heads Berlin Partner, the investment promotion agency of the German capital, told The Straits Times that two other companies besides WB21 have relocated from London to Berlin since the June referendum - real estate investment firm BrickVest and finance company Swissbank. Another two are due to move by the end of the year.
About 40 others have expressed interest, said Mr Franzke, adding that more than half of these are in fintech and information and communications technology. In September, his agency set up an office in London to drum up interest.
He shrugged off concerns about the German language, saying "English is not an issue in Berlin. It's different when you go to Munich or to the south or to Paris where you really need the local language".
To navigate German bureaucracy, Mr Franzke says his agency offers a package in which "we translate the official documents and offer companies the guarantee that they can get working residence permits for their staff and family members in five working days".
He added: "Sometimes we manage to do all that in two days."
Mr Klaus-Heiner Roehl, a senior economist at the Cologne Institute of German Economy, told The Straits Times that Berlin could well emerge the winner among German cities from Brexit.
"Many founders prefer the vibrant Berlin atmosphere to Frankfurt, and digital companies don't need the physical proximity to the banking sector in Frankfurt," he noted.