ANY OTHER BUSINESS| MARTIN VANDER WEYER
Despite what Big Bang destroyed,
there’s still nowhere quite like the City
véritable adversaire’. In the end, Brexodus
will be limited by the plain fact that, for all
its current faults and past mistakes, there’s
nowhere quite like the City of London.In the real world
The Heathrow decision was heralded as top
news and a big boost to London’s continu-
ing claim to be ‘open for business’ — even
if bankers actually prefer the more civilised
City Airport. Heathrow’s opponents still
have everything to play for: I’ll be amazed
if the third runway becomes operational
before I move into a care home, and mild-
ly surprised if it happens at all. So in real-
world, what-happens-next terms it is less of
an event than, say, the $85 billion bid by US
telecoms giant AT&T for the entertainment
group Time-Warner, or even the $47 billion
offer by British American Tobacco for the
portion of rival cigarette-maker Reynolds
that it does not already own.
Then again, the AT&T deal may be a
non-event if it fails to secure regulatory
approval, as many pundits predict, or
becomes a value-destroying fiasco like the
previous marriage of Time-Warner (owner
of CNN and HBO) with the internet pro-
vider AOL, often cited as one of the worst
merger deals of all time. It’s a 21st-century
cliché that the future of mass entertainment
is in partnerships with mobile and digital
networks — but no one has built a winning
model, while disruptive new players spring
up all the time. So let’s not hyperventilate
about that story, either.
That leaves cigarettes, another industry
in which consolidation is the path ahead —
but with an unchanging product that billions
of people, mostly in developing countries,
continue to buy despite proven health risks.
If you had bought BAT and Reynolds shares
in early 2000, you would have multiplied
your money 20 times by now — and there’s
no reason why investors should not continue
to do well out of their combination. Morally
troubling it may be, but simple, sinful invest-
ments are often the best.A
s the 30th anniversary of Big Bang
loomed, I found myself back at the
scene of my City demise. Ebbgate
House — headquarters of BZW, the invest-
ment banking arm of Barclays where I
worked until one fateful morning in 1992 —
fell deservedly to the wrecking ball a decade
ago. It was replaced by Riverbank House,
and there I was last week, hovering above
where my desk used to be, talking about
‘why no one listens to the City any more’
and reliving the P45 moment that released
me into the happier world of journalism.
Personal echoes apart, this was also a
moment to revisit Big Bang, the Thatcherite
reforms launched on 27 October 1986 that
allowed banks such as Barclays to buy stock-
exchange firms, create BZW and its ilk, and
compete against Wall Street’s giants. Argu-
ably, Big Bang cemented for London the
pre-eminent place in the financial world that
Brexit negotiators must now seek to defend.
It attracted huge foreign investment and
critical mass in every area of finance, up to
and including the now fashionable ‘fintech’.
It provoked the development of Canary
Wharf and the rebuilding of the Square Mile
itself, providing unrivalled trading-floor
space. It replaced the cartels of the old City
with a fiercely competitive capital market of
vast scale and sophistication.
But I still believe the negatives of Big
Bang outweighed the positives. New own-
ership structures destroyed the partner-
ship ethos that worked so well in terms of
risk control and specialisation. A commu-
nity of niche businesses that lived on their
wits became an oligopoly of ill-managed
and largely foreign-owned conglomerates.
The urge to imitate New York engendered
a bonus-hunting hire-and-fire culture that
distorted risk judgment and eroded loyalty,
trust and institutional memory. Long-term
client relationships gave way to transaction-
al and securitised ways of business in which
human empathy was lost. The Thatcherite
notion of ‘people’s capitalism’, embodied
in the privatisation share sales of the 1980s,
was buried as the City retreated into a self-
admiring, self-serving silo; rule-bending,
mis-selling and trading folly abounded.
And that, in a nutshell, is why no one lis-
tens to the City any more. If Brexit breaks
open the silo and shakes out the complacen-
cy, perhaps it will encourage London’s finan-
cial community to rediscover its better self.Brexodus: where will they go?
Anthony Browne of the British Bankers
Association says his members’ ‘hands are
hovering over the relocate button’ as they
work out which operations must migrate to
preserve EU ‘passporting’ rights. A report
by consultants for the CityUK lobby group
estimates Brexit-related City job losses at up
to 35,000 in a ‘lowest-access’ no- passporting
scenario; 40,000 adjacent jobs might also be
at risk. But where would they go?
I’m grateful to Financial World magazine
for a survey of possibilities. Dublin would be
first choice for many Anglophones, but its
resources as a financial centre are tiny —
‘Canary Dwarf’, local wags call it — and the
Irish capital would prefer to complement
London, as Boston does New York, rather
than compete. Frankfurt is more aggres-
sive: it aims to snatch the European Bank-
ing Authority from London as well as the
merged London-Deutsche stock exchange
and will expect full-scale banks to relocate,
not mere front-office functions that might
secure market access. But it also lacks scale,
and to London bankers it will always be
drearily provincial; in truth, it is the hard-
pressed German banks themselves that will
be keenest on moving jobs there.
Meanwhile La Défense, the Parisian
equivalent of Canary Wharf, is campaign-
ing under the jaunty slogan ‘Try the Frogs!’
to attract financial firms from London with
a promise of tax and labour-law breaks; a
local government chief has promised to ‘roll
out the red carpet’. But for all its charm,
France retains a prejudice against Anglo-
Saxon capitalism that international bankers
find uncomfortable, recalling that Presi-
dent Hollande once described them as ‘mon