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New City of London policy chief downplays Goldman threat

New City of London policy chief downplays Goldman threat

New City of London policy chief downplays Goldman threat
May 05
20:03 2017

On her first day in office, Catherine McGuinness was faced with a stark warning from Goldman Sachs that London would “stall” as a financial centre because of Brexit.

As the new head of the City of London’s policy and resources committee, Ms McGuinness is the most powerful official overseeing London’s financial district, responsible for the development and prosperity of the Square Mile.

So she was keen to put in context the extent to which international banks are looking to relocate from her turf.

“I think the word ‘stall’ is being taken out of context when you look at what he is saying as a whole,” she said, adding that a BBC interview with Lloyd Blankfein, the Goldman chief executive, was largely positive.

“He is saying that he wants Goldman to keep the great majority of its people in London, and that it will still be the bank’s biggest European office in a decade’s time,” she said.

As for Mr Blankfein’s warning that the bank needs legal certainty to avoid moving operations out of London prematurely, that mirrors the City’s own view, she said.

“We have long been saying that the financial sector needs early clarity around timing and a breathing space for implementation,” she said. “It’s one of our three requests, along with the maximum access to markets and talent.”

Brexit is perhaps the biggest concern facing Ms McGuinness as she starts her new role. A former City lawyer, she said her background would be “very helpful”.

“I worked in the City through both Big Bang and the financial crisis, so I have seen the markets at close hand in good times and bad,” she said.

Previously deputy to the outgoing policy chair, Mark Boleat, Ms McGuinness’s biggest task is to ensure that the City retains its status as a global financial hub.

That means everything from the Square Mile’s physical infrastructure and ability to recruit talent from overseas, to fostering trade links with China to cement London’s position as a hub for trading in renminbi.

She was sanguine about the prospects for a deal with the EU, notwithstanding recent heated political exchanges between London and Brussels, and renewed calls from Paris for euro-clearing to be controlled more tightly by the ECB.

For all the talk of groups moving activities out of the Square Mile, most are taking the same view as Goldman in trying to minimise movement out of London. “If you look at some of the reports, which said that 75,000 jobs could be at risk, it is encouraging that the banks are only talking about a couple of thousand going — at least at this stage,” she said.

Demands by the EU to shift more clearing of euro-denominated securities to the continent are, she thinks, a “red herring”.

“All sorts of currencies are cleared in London, not just the euro,” she said

“There are good reasons why this is centralised to do with efficiencies and financial benefits such as netting.”

Beyond the EU, she is concerned to bolster the City’s position as a leading tech hub. Technology companies now account for nearly 10 per cent of the Square Mile’s office occupancy. “Given the advantages we have, next to the financial sector and with a close interface to the creative industries, we should be one of the world’s great tech centres,” she said.

Ms McGuinness’s other priorities during her up-to five-year term include improving the City’s physical environment and selling its benefits more widely around London and the UK.

The Square Mile is renovating much of the streetscape around the Barbican and moving the Museum of London to a new site in Smithfield.

“It is important for the City to build better relations with other parts of the country, and to prove the sector’s value to the real economy.”

She is championing initiatives to boost links with Northern Ireland and Scottish cities. These include everything from tie-ups between Ulster’s tech hub in Londonderry and helping to promote other cities in the City of London Lord Mayor’s trips abroad.

“We need to explain ourselves better — and not just in figures,” she said. “How when it comes to things like mortgages and insurance contracts, people’s livelihoods depend on what goes on in the financial sector.”

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