Peter York writes…
That snowy Thursday, the morning of the e.i/FT/City of London/Cass Business School/British American Project discussion “The City versus Wall Street: Who’s Ahead?” my own newspaper, The Independent, had “Spend, Spend, Spend” as its high-drama cover-line. It was a London story, about the extraordinary order of money that was being earned and spent in the capital. There were billionaires, oligarchs and property prices of course. But above all it was about The City and the life that fed on it. City salaries and bonuses – the £4 bn. being handed out this spring – and the success that underwrote them. The success that meant London, on a number of crucial indices, was moving ahead of New York as the world’s No. 1 international financial centre.
So it was pretty damn sharp of e.i to have set up this discussion for that day, just when we were all asking ourselves, as Lionel Barber, editor of the FT, put it ‘Does London believe it’s own hype?’ Despite the copious amounts of white stuff (snow) it was full house of sober-suited analytic, forensic types – and that’s only the girls – in the Cass Business School, right there in the City itself, convenient for the bonus boys, in a block that actually looks like an un-showy investment bank. (I think if you’re teaching something demanding it helps to echo the style and values of the industry on your doorstep. God knows how they pay the rent.)
Julia Hobsbawm, e.i’s legendarily reclusive founder introduced, the panel. Lionel Barber, the youthful – looking Editor of the FT was Chair, not looking as if he’d spent 30 years in journalism as Julia claimed in her intro; Anthony Hilton, The Evening Standard’s long-serving and rather revered columnist and City Editor; Scott Moeller, The Cass Business School’s Honorary Visiting Professor of Finance and CEO & Director of Executive Education at Cass, and Tony Halmos, Communications Director of The City of London Corporation, whose gloriously archaic coat of arms featured somewhere behind the stage.
Tony Halmos led off, giving a measured view of what had really happened. The recent McKinsey report (commissioned by Mayor Bloomberg we were told) on New York’s financial future had provoked ‘panic on Wall St’ headlines and London clearly was doing well, but don’t let’s go mad. What was really happening was long-term and global, a shift in the centre of gravity as capital markets diversified. Sure, London now leads in a number of areas, and more money was raised on the LSE than the NYSE last year. But New York was still by far the largest national market while London was essentially international in its business, its ownership and staffing.
It all sounded a bit like a measured comparison between, say, Chicago O’Hare and Heathrow until he went on to say that Goldman Sachs had set up a ‘duplicate’ CEO’s office in London. Now that’s a killer fact in my book, a singular recognition of London. They’re not doing that in Frankfurt or Tokyo, which are just big local markets. New York, Halmos continued swiftly, isn’t exactly down-and-out. The Sarbanes-Oxley requirements were certainly a problem compared to our ‘light touch’ regime, but Mayor Bloomberg had treated it as a wake-up call and New Yorkers were pretty responsive types. And there were still challenges for London, particularly our infrastructure and the constant need for a better trained workforce. He ended up saying we had to remember – as if it didn’t hear it every day in every column – that China and India would eclipse the USA soon enough. (My mind started to wander to the idea of a nice flat in the smart part of Delhi – I don’t fancy Beijing.)
Jonathan Taylor, Director General of the London Investment Banking Association said we absolutely mustn’t gloat (personally I’d rather wanted to; I’m sure the Americans hadn’t been that shy whenever it was New York overtook London). They were different kinds of success and there was no room for complacency. The City had been helped by the wave of immigration into the UK , bringing new City workers from across the world (all those French in South Kensington!) and our lovely housing and quality of life. And, he reminded us, American’s share of the overall wholesale business had actually increased. We could be seriously set back if we had our own Enron under those lovely light touch regulations.
Scott Moeller from the Cass Business School led off by explaining that though he obviously sounded American (and only Americans have names like that, our Scott) he was actually an international creature. He’d grown up and graduated in Brussels so he could take the big picture view. Then he made some sort of Super Bowl analogy, which completely lost me, like all references to American sport. Anyway the point was internationalisation, with the trend to more deals occurring outside the US since the 1990s. And we should count in Hong Kong and Shanghai, where growth rates outran London and New York.
And – cautionary tale – did we remember the dizzy days of Tokyo 1989, when Nomura’s market cap’ was more than all of Wall St. Titans put together. And look at it now. Or those early Euro-years when Frankfurt’s spokesmen confidently predicted they’d overtake London anytime soon. (I think it’s all because Goldman’s CEO doesn’t want a flat in Frankfurt – and can you blame him.) Anyway he said, getting in a swift plug for the Cass, educating our masters, Middle-Easterners wanted alternatives to Harvard, and the labour pool in London was bigger and better than Wall Street’s.
As I’d hoped, the deliciously cynical Tony Hilton of the Evening Standard referred to the free-standing weirdness of the City. Built originally on the back of the British Empire and the Flag it had now ‘floated free of the British economy’ through its open-door policy, those light-touch regulations and a Niagara of other people’s money. We’d got English, the language of business, a desirable time-zone and the charms of the city. We’d even got Sharia-compliant bonds (Americans won’t touch anything like that) and the City had provoked a brain-drain from Europe where the top jobs actually went to the talent (because the English can’t read). In London all investment bankers had to do was hold out a bucket to catch the flow of gold.
The Americans will find it difficult to rival all this, Hilton said, because America was such a protectionist society. The dollar will be less in demand as an international currency in future. So he was a bull for London “It’ll certainly see me out”.
After all that there was a lot of audience response. Someone said that “everyone in the LSE wants to work for Goldman Sachs” There was an arcane question – meaning I couldn’t understand it – from a hedge-fund man about regulation.
An American lady working for the FT wondered why all the panel seemed to be London bulls.
Martin Vander Weyer who covers Business for the Spectator said didn’t it all sound rather distortive for the rest of the city and the country to have this money machine pulling in all the talent, buying up all the nice property – weren’t we too exposed to financial services in London? Tony Hilton said it’d been like that for 60 years so it was a bit late to worry. And somebody said the broadsheets Business Sections were so unhelpful they could drive the City away (but where?)
Lots of media stuff followed. Did we realise, for instance, that the WSJ had a lower international circulation than the FT? Or that nine/tenths of what happened in the City wasn’t covered in the national press? (Arguably because it was too boring).
I asked whether it mattered that the City was largely owned and managed by non-Brits and a chunk of its returns went elsewhere. This proved a Bateman question. Tony Hilton said the City was a wonderfully communist affair where all the surpluses went to the star performers. Everyone else chorused that it didn’t matter in the least who owned the assets. The tax take from all that activity was huge (does it pay for us to have Birmingham as a pet?)
At the end we somehow worked our way back to China – apparently Chinese students are now the largest single group in the Cass Business School. And they’re not planning to go back to China.
Peter York writes for The Independent and is one of e.i’s Advisers and Contributing Editors.
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