Bankers: London will survive, it always does
ON Friday December 13 the mood in the City was ebullient. At the Hawksmoor steak house on Guildhall bankers were their old raucous selves. Boris had won. The Corbyn threat crushed. Cautious clients had a new sense of verve. That deal they didn’t want to do while the election uncertainty and Brexit hung over them was suddenly on.
Shares surged-- £33 billion was wiped on to the stock market. The pound rallied, which made buying overseas companies uddenly more affordable. Interest rates would surely go up, boosting bank profit margins. The FTSE 100 closed at 7353. The talk was at what point it would break 8000.
Plainly, that mood of optimism no longer prevails. But in the longer term, so long as the virus is defeated, it can return, say bankers. Whatever happens, London’s status as the leading financial centre in Europe is not seriously at risk – Brexiteers will tell you it never really was.
Barclays chief executive Jes Staley is one who believes strongly in London. His strategy has always been to make sure the bank remains a global investment banking player, a lender that can compete with Morgan Stanley and the rest, here and in New York.
“We are bullish on the City,” he tells the Standard. “The political situation is so much clearer. The current government has got at least five years and perhaps beyond that, so the potential disruption to markets from Labour has gone.”
What about Brexit? “People are exaggerating the challenge of a new trade agreement. There will be a lot of noise around that. On one level there already is a trade deal. There is a concurrent negotiation with the US. If the UK shows the agility of which it is capable, it could get a good result there too.”
In other words, the need for capital which is managed from London is not going to go away. “As long as the buy-side stays here, which it will, everyone wants a presence in the City,” says Staley.
“We have moved euro clearing to Frankfurt, but that’s a balance sheet issue. It’s not a huge part of our business.”
Staley adds: “The legal systems in the UK function. You have the educational system, you have the regulators, you recovered from the financial crisis.”
Perhaps banks will find a new sense of purpose. Alison Rose, the chief executive at RBS, says: “The ongoing uncertainty that we are experiencing is unprecedented. It is our job to make sure we are there for our customers and that has never been more pertinent than now. Our purpose is to champion the potential of people, families and business so they can thrive.”
RBS already has a £5 billion Working Capital Support fund in place. Other measures will follow.
People who say the City of London will prevail have this in their favour: they have always been right before.
