Paris has two notable disadvantages as a centre for international financial services: high taxes and muscular trades unions. On the plus side, it boasts a workforce renowned for its quantitative expertise and there are signs that banks are warming to its charm.
Arnaud de Bresson, managing director of Paris Europlace, which promotes the city as a financial centre, said the number of staff employed locally by foreign banks and asset managers had doubled since 2000. He said the city's quantitative-focused workforce was part of the allure.
"Foreign banks are moving teams to Paris. They say they can find highly skilled technical staff here."
Barclays Capital and Royal Bank of Scotland are among those boosting their French presence.
BarCap hired Jean Jacques de Balasy from Morgan Stanley last month to head investment banking in France and Belgium. RBS hired two Paris-based sales people last year to work with structured fixed-income products.
Stéphane Alizond, RBS's London-based head of financial markets for the French corporate and public sector, said the bank planned to hire at least three more staff this year. "It's easy to recruit good structured sales people in France. There is a strong base to draw on," she said.
French banks are equally interested in mathematical talent. David de Villeneuve, head of investment banking at Calyon, said it aimed to strengthen its Paris equity derivatives team. "France has an advantage when it comes to derivatives. People here have a strong quantitative background."
France's mathematically inclined bankers are the product of a handful of elite schools, such as University of Paris VI, Ecole Polytechnique, Ecole Normale, Ecole Nationale de la Statistique et de l'Administration Economique and Université Paris Dauphine. Like Alizond, many migrate to London.
Frédéric Sola, a director at Financial Services Consulting Group, a search firm, said few returned. "Once someone has moved to London, it's almost impossible to persuade them to come back," he said.
French bankers preferred to work in London because of taxation reasons. French higher-rate income tax is 50%, while the UK top rate is 40%. Higher taxes translate into higher costs, Sola said. According to Paris Europlace, it costs French employers €3 to give employees earning €50,000 an extra €1 as net pay. In the UK, the cost is €1.8.
Despite the tax discrepancy, Paris remains Europe's second-largest financial services centre in terms of staff numbers.
De Bresson said the city's financial services industry employed more than 250,000 people last year, compared with 315,000 in London and 90,000 in Frankfurt. He estimated that 15% of Paris financial services employees worked in investment banking.
Parisian financial services employment is growing. De Bresson said the city underwent a jobs cull in the early 1990s, losing 30,000 banking positions in four years, but said the situation had improved since 2001. "After reducing costs following consolidation, banks are hiring again," he said.
Recruiters point to growth in the asset management, real estate and project finance sectors. Doughty Hanson, the private equity fund manager, last month appointed Lahlou Khélifi from Goldman Sachs to develop its French property business.
Antoine Morgaut, managing director of search firm Robert Walters in France, said French asset managers were hiring multi-managers and marketing staff for derivative products. ADI, a Paris hedge fund, hired 50 staff last year and planned to hire 10 more this year.
Barbara Valaperti, a consultant in the financial services division of search firm Heidrick & Struggles in Paris, said French-based private equity funds were hiring. "Funds are bringing teams here, or starting to develop in France."
Charterhouse Capital Partners reopened in Paris last month, after closing its French office in 1998.
Corporate finance is keeping recruiters busy. Denis Marcadet, chief executive of Vendômes Associés, a Paris search firm, said all banks were looking for experienced staff.
De Villeneuve said Calyon planned to hire junior execution staff with between one and five years' experience, and a couple of seasoned investment bankers with strong relationships with large quoted companies in France.
Corporate finance boutiques have been among the biggest hirers. In January, Dôme Close Brothers, the French arm of the UK merchant bank, added nine staff in Paris. Olivier Dousset, managing director, said: "The pipeline is good in technology, health, life sciences, leisure and manufacturing. French companies have recovered some of their flexibility and foreign buyers are surfing the French market." Dôme Close Brothers planned another four or five senior corporate finance hires, he added.
However, not all banks were willing to discuss hiring plans. One banker said quantifying recruitment plans could be inviting trouble. "We've recently made redundancies and to talk about hiring could create problems with the unions." For all its charms, in the city of lights some things are best left in the dark.