German banks are preparing for a so-called “hard Brexit” and the spoils of the U.K.’s departure from the European Union could be shared by other European cities, according to German banking and finance officials.

German central bank executive board member Andreas Dombret said that German banks were planning for a hard Brexit — that the U.K. could leave the EU without any access to the single market or customs union — amid increasing uncertainty over the progress of Brexit negotiations.

“Banks are planning on a hard Brexit because they don’t know what the outcome is and I think that’s a wise thing to do,” he said Tuesday, adding that many banks were planning on relocating out of London’s financial district.

A key uncertainty for the U.K.’s financial industry is how much access it will have to the EU post Brexit with much uncertainty over “passporting rights” which allow financial firms within the EU to run operations and offer services throughout the European Economic Area (which consists of the EU member states as well as Norway, Iceland and Lichtenstein).

The U.K. would like to retain those rights but that is looking unlikely and many European banks could reduce or even close their London offices. Deutsche Bank, Credit Suisse, JPMorgan, UBS and Standard Chartered are among the banks that have all made noises about relocating, outlining plans for European operations post Brexit.

Frankfurt and Dublin are perceived to be the top destinations for London-based financial institutions looking to relocate, as well as Paris with small amounts of information coming from bank officials regarding potential moves. HSBC’s CEO Stuart Gulliver confirmed in July that 1,000 staff could move to Paris if there was a “hard Brexit” scenario while Goldman Sachs Chief Executive Lloyd Blankfein teased that the investment bank could move to Germany.

Dombret told CNBC on Tuesday that banks would relocate to cities across Europe, not just Frankfurt.

“First of all, banks will not only relocate to Frankfurt, they will also relocate to other cities – Dublin is the other large candidate – there will be firms going to Paris and also to Amsterdam, which is not bad, which means that the risk will be dispersed around the euro zone and it won’t be in one city but also in a large amount of cities,” he told CNBC.

‘Worst case scenario’

With the clock ticking until the U.K.’s formal departure date of March 2019, there’s little time to lose if Britain wants to reach a trade deal with the EU and to protect certain industries’ access to EU markets – such as banking. The alternative is that no deal is reached and Britain has to fall back on World Trade Organization (WTO) rules.

Brexit negotiations have made little progress, however, with sticking points over EU and U.K.’s citizens’ rights after Brexit, the Northern Ireland/Republic of Ireland border and ambivalence over a “divorce bill” detailing the U.K.’s financial commitments to the EU that it should honor.

Nonetheless, Dombret insisted that other EU cities were not fighting over the spoils of Brexit.

“We’re not in a race with other cities about who gets what, the outcome of the referendum is still disappointing but has to be accepted,” he said, noting that a hard Brexit was the “worst case scenario.”

Still, he said he had spoken to senior bankers in London who he said were “pretty advanced in their thinking” in terms of Brexit planning and he suggested that several institutions had made applications to relocate to Frankfurt.

“We are working with them in workshops in order to make sure that there is a smooth transition, as smooth as possible, and that we don’t run into any sort of financial stability risk, which I don’t see right now.”

Germany looking attractive

It might be a good time to relocate to Germany with the economy looking buoyant. On Tuesday, official data showed the German economy grew 0.8 percent in the third quarter, exceeding economists’ expectations and picking up from the 0.6 percent growth seen in the previous quarter.

The only uncertainty right now is the government, with Chancellor Angela Merkel’s conservative bloc, the CSU-CDU looking to form a coalition government with the pro-business Free Democrats and the Greens, although preliminary talks have been slow and formal negotiations are yet to begin.

Deputy Finance Minister of Germany Michael Meister also told CNBC on Tuesday said that the economies of Germany and the EU were doing well but that political stability would be a boost.

“We have low interest rates, labor market expense in all EU countries, so we have a very good frame(work),” he said.

“If Germany has a stable political frame then I believe that would be a big (positive) mark for the economy. If you look at the data, the economy is running better than we believed at the beginning of the year. It’s driven by a strong labor market, payments rise, so we have in the country a lot of consumer spending and on the other side we have a good exports, so at the moment it’s good running.”