Judging from some headlines one might have imagined the City of London was being emptied of bankers and traders as they flee to Frankfurt, Dublin and Paris ahead of Brexit.
Reality is very different. Of the 40 banks that run their European operations out of London just ten have so far applied for EU-based licences.
The opportunity London’s rivals saw for defenestrating the City as a financial centre may be slipping through their hands.
Passing storm: The opportunity London’s rivals saw for defenestrating the City as a financial centre may be slipping through their hands
Officials at the Frankfurt-based European Central Bank are expressing concern that banks are not taking Brexit risk seriously and may be planning to stay put.
The lack of interest in shifting out of the City is fascinating. It could take 18 months to gain an EU licence which would mean, if lenders are serious about moving operations, they may have missed the boat.
Much Continental banking is still in the dark ages when it comes to servicing big European companies which raise more than 50 per cent of their equity and debt through London. This is not because global firms prefer The Proms to Wagner.
Put simply, City markets are more liquid, the pricing of loans finer and London’s equity and asset management markets deeper. One wrinkle which some banks are exploring is taking out broker-dealer licences issued by national authorities in the EU rather than a full ECB banking licence. Leading investment banker Morgan Stanley is among those reported to be taking this route.
This would enable it to deal in European equities and debts but exclude it from taking deposits on the Continent.
Since much of the business is trading in equities, debt and derivatives, rather than traditional banking, they don’t actually need to move thousands of staff at all.
As it happens, several of the biggest players, including Barclays, HSBC, JP Morgan and State Street don’t have to make radical changes since their European offshoots are already supervised from Frankfurt.
Governor of the Bank of England Mark Carney is among those who have been relaxed about the erosion of London’s lead as a financial centre post-Brexit.
John Cryan, chief executive at Deutsche Bank, is among those talking up Frankfurt as a location of choice for overseas banks.
But Carney argues that, when push comes to shove, none of the alternative financial centres have the capacity to do the trading done through London or take on the risk.
Critics of Brexit argue that the bankers will vote with their feet by moving offshore. The reality is that most are deciding to run on the spot.
Any chairman with a sense of honour would regard a 47 per cent vote of the free float against their stewardship as an embarrassment and step down. But there is nothing normal about chairman Keith Hellawell or governance at Sports Direct.
Many retailers see annual general meetings as an event, a chance to reach out to investors, consumers, employees. The chief executive would no more miss being at the podium than the Chancellor would skip being at the despatch box on Budget day.
Mike Ashley writes his own rules and was nowhere to be seen at the AGM held at Sports Direct’s notorious Shirebrook head office. He was cocking a snook at shareholders and those wanting to see the company dump the worst of its employment practices and adopt a governance model compliant with the City codes.
Failure to do this reflects badly on Merrill Lynch which brought the company to market in 2007, and current brokers Liberum and auditors Grant Thornton, who have a duty of care to investors.
The recent history of Sports Direct inspired Theresa May to deplore companies which disgrace capitalism.
What is needed at Sports Direct is a full Companies Act probe which holds all those involved in weak governance to account.
The premature resignation of Stanley Fischer as vice-chairman of the Federal Reserve ends the tenure of one of the wisest figures in global finance.
Always courteous, Fischer brought academic excellence and experience to the job and has been a strong voice against easing regulation. His departure gives Donald Trump opportunity (Congress willing) to reshape the Fed, with four vacancies to fill including that of chairman Janet Yellen.
Not a comforting thought…
Courtesy: Daily Mail Online