UK Edition
Barclays boss: London's 'gravitational pull' on finance will not wane after Brexit
Brexit is unlikely to lead to a sudden decline in London’s status as one of the leading centres for the global capital markets, the boss of Barclays has predicted.
The vote in June to leave the European Union sparked fears in the City that the UK will quit the single market, which could damage London’s position as an international hub for banking and investment.
Despite those concerns, Jes Staley, the chief executive of Barclays, argued yesterday that while Brexit would lead to a great deal of uncertainty for the banking sector, it was unlikely to result in the City losing its “gravitational pull” in the capital markets overnight.
“The users of capital find the providers of capital, not the other way around, and the providers of capital, by and large, are resident in London and New York,” Mr Staley told the Financial Times’s Banking Summit. “I don’t think London will lose its gravitational pull in terms of management of capital in any reasonable timeframe.”
He added that it is “going to be very hard to break” the grip that London already exerts as a centre for the markets.
There has been speculation that Frankfurt or Paris could emerge as rival European centres to London, although many financiers believe that New York is the city most likely to benefit if banks do decide to move operations away from the UK following Brexit.
Asked whether Barclays was looking at setting up a subsidiary in Frankfurt, Mr Staley said Barclays was “looking at a lot of options” to help offset the uncertainty that the UK leaving the EU will cause.
The Brexit vote, which took financial markets by surprise, was followed earlier this month by the even bigger shock caused by Donald Trump’s unexpected victory in the US presidential election.
Mr Staley, a US citizen who spent much of his career at Wall Street giant JP Morgan, said Mr Trump’s triumph was likely to result in pressure on the US Federal Reserve to pursue tighter monetary policy.
“You’ll see political pressure on the Fed to be less accommodating,” the Barclays chief predicted, adding that “influence on the Fed is going to be another significant consequence of the presidential election”.
He said that there was “something to” the school of thought that the ultra-loose monetary policies of central banks around the world were starting to become less effective.
Mr Trump has indicated that as president he will take a protectionist approach towards trade, in particular a hardline stance on China and Mexico.
At the same conference, Standard Chartered boss Bill Winters conceded that the emerging markets-focused banks would be “in the line of fire” if the US launched a trade war with China.
Mr Winters said that he believed Mr Trump’s expected economic policies were likely to “accelerate” the US dollar’s decline as a global currency.
There have been rumours that Mr Trump has considered Jamie Dimon, the chief executive of JP Morgan, to become his Treasury Secretary, although the banker is not thought to be interested in the post.