MAGGIE PAGANO: Citigroup helps London shrug off the Brexit blues with its £1.2bn skyscraper
What a boost for Britain. Citigroup, one of the world’s biggest banks, is close to buying its skyscraper in Canary Wharf for around £1.2 billion.
It’s a blockbuster of an investment, one of the biggest real estate transactions ever in the UK, and a symbolic vote of confidence in the future of London as one of the world’s great financial centres.
The price is not far off the record set two years ago with the £1.3bn sale of the Walkie Talkie to Hong Kong’s Lee Kum Kee while both Goldman Sachs and UBS bought their London HQ’s last year for more than a £1bn each.
Citigroup, one of the world’s biggest banks, is close to buying its skyscraper in Canary Wharf (pictured) for around £1.2 billion
Citi’s proposed purchase of the 42-storey Citi Tower at 25 Canada Square shows that London’s commercial market is buoyant despite the scaremongering over a No Deal Brexit. The residential market is also bubbling.
Hamptons International reports that more than half of all the homes in central London were bought by international buyers, the highest since 2012. And guess what? EU buyers were by far the biggest single group. Make of that what you will.
With 40 days to go before Brexit takes off, Citibank has clearly priced in the risks of a no deal scenario and is looking to the long-term when political stability returns. It’s a classic arbitrage.
Unlike most US banks, Citi has said repeatedly that it’s not running away from London, and that Citi Tower will remain HQ for its European, Middle Eastern and African operations. It’s good to see bankers keeping their word.
And unlike other overseas industrialists – Nissan and Airbus come to mind – Citi does not appear to have either asked for or received any government subsidies or incentives to stay.
Whatever you think about the imbalances of the economy, the UK’s financial services industry is remarkably robust, and the City is still the best-placed landing strip for the big banks doing business in the EMEA (Europe, the Middle East and Africa) and Asia regions.
Maggiae Pagano says: Whatever you think about the imbalances of the economy, the UK’s financial services industry is remarkably robust, and the City is still the best-placed landing strip for the big banks doing business in the EMEA and Asia regions’
Which is why Citi’s investment undermines the persistent warnings that US banks plan to airlift thousands of staff out of London across to the continent.
This is just not the case. Out of the 9,000 staff that Citi employs in the UK, only 60 are being relocated out of London to European Union countries. A recent Reuters survey of 135 financial firms disclosed the majority of them want to keep London as their HQ, and that fewer than 2,000 jobs have been switched to the EU since the referendum.
Hardly an exodus, and miles away from those tantalising post-referendum headline warnings estimating that up to 100,000 jobs would be lost. Time for the architects of Project Fear to accept there is nothing to fear but fear itself.
Clearing good to go
There was another shot in the arm yesterday when Europe’s financial markets regulator gave the UK’s three derivatives clearing houses permission to keep serving EU clients in the event of a No Deal Brexit.
This is crucial for two reasons: it’s a thumbs-up for London’s fight to stay as the central market for euro clearing, and will help avoid market chaos if the UK and the EU do not reach a deal.
Even the EU recognises that any disruption to the daily multi-billion dollar business could drive up costs for EU companies and investors. Clearing houses are the City’s deep plumbing, acting as the third party to financial companies which trade in bonds, stocks and derivatives.
That’s why the European Securities and Markets Authority’s decision to recognise UK clearing houses LCH, ICE Clear and LME Clear as ‘third-country central counter-parties’ is eminently sensible.
Approval starts on March 30 and runs for a year, giving parties time to find a longer term solution. With agreements already now in place for clearing, planes, lorries and the Channel Tunnel, the framework for a safe exit is being constructed.
New political parties
Like buses, political parties are arriving in threes. We have Nigel Farage’s Brexit Party, the City’s own Jeremy Hosking’s Brexit Express and now Chuka Umunna’s Independent Group. Only the Independents have given a hint about future business policy. The ex-Labour Seven say they support a ‘diverse, mixed social market economy and well-regulated private enterprise’. Talk about a clear blue line with the Corbynistas.