German bank body sees expansion by 20 foreign banks post Brexit

* Germany to get up to 5,000 new banking jobs

* Many new employees will be hired locally

* Frankfurt may see banking assets doubled (Adds details on Brexit-related moves)

FRANKFURT, March 14 (Reuters) - Germany's association of foreign banks expects about 20 banks to expand their presence in Germany as a result of Britain's decision to leave the European Union.

After Brexit, banks based in Britain will potentially lose so-called passporting rights that allow them to do business across the EU from their London base.

Some banks have already moved staff or set up offices in the EU as part of contingency plans ahead of Britain's departure from the EU.

This has sparked rivalry between Frankfurt, Paris, Amsterdam and Dublin, which are all seeking to attract banks and staff from London, the region's biggest financial centre.

"This will involve up to 5,000 new jobs (in Germany) in the next two years, many of which will be hired locally," Stefan Winter, the head of the Association of the Foreign Banks in Germany (VAB), said on Wednesday.

Winter said the VAB, which represents more than 200 foreign banks and financial services institutions in Germany, expects the bulk of bank jobs to shift to Frankfurt next year.

Individual project teams will move in 2018 and in the longer term he expects total assets of Frankfurt-based banks to double to 800 billion euros ($989 billion).

Banks have are also begun moving activities to Paris, Dublin, Madrid and Amsterdam, but Frankfurt -- home of their supervisor, the European Central Bank -- has emerged as a favourite location for many financial institutions.

Paris, which is trying to lure as many jobs as possible from the City of London (LSE: CIN.L - news) financial district, may have made some ground over the last year, Winter said, pointing to French labour reforms.

France last year introduced a reform which includes caps on payouts for unfair dismissals and greater freedom to hire and fire, as well more flexibility on working hours.

"The German government should act fast on labour reform now. Paris is a step ahead," Winter said.

Earlier this month, Goldman Sachs (NYSE: GS-PB - news) said it was moving some senior bankers to Frankfurt as it braces for divorce between Britain and the European Union.

Britain's Standard Chartered (BSE: 580001.BO - news) said it has started interviewing candidates for banking jobs it is moving to Frankfurt due to Brexit.

And Swiss bank UBS (LSE: 0QNR.L - news) told employees that the majority of those affected by Brexit will move to Frankfurt from London.

But the bulk of new banking jobs that move to Frankfurt are unlikely to be filled by bankers currently working in London, a person close to the matter said.

"Only 20 to 30 percent will actually relocate from London to Frankfurt, the reluctance to moving is quite high," the person said.

The prospect of bankers pouring into Frankfurt from post-Brexit Britain has also worried local residents anxious about the effect on an already dire housing shortage.

($1 = 0.8089 euros) (Reporting by Hans Seidenstuecker Writing by Arno Schuetze. Editing by Jane Merriman)