Brexit has not damaged the City of London, a senior Wall Street boss has said, despite fears that leaving the bloc would trigger an exodus of bankers and business from the Square Mile.
David Livingstone, Citigroup’s chief executive for Europe, Middle East and Africa, told The Telegraph that the City has “not been diminished” by Brexit, adding that efforts by Brussels to create a rival financial centre to London have so far failed to yield meaningful results.
Britain’s attractiveness for international banks lies in its strong rule of law, common language, geographical location, quality of education and quality of life and “none of that has been diminished by Brexit”, Mr Livingstone said.
“For me, it’s an absolute certainty that the UK will remain with those characteristics and therefore remain the place that we have our headquarters.”
Finance chiefs warned ahead of the 2016 referendum that Brexit would mean as many as 232,000 jobs in the City would be lost. However, a mass exodus has failed to materialise.
Livingstone said that Citigroup had shifted “a few hundred roles” out of London since Britain left the EU, largely owing to regulatory requirements, “but no more than that”.
He added: “I still think it is important that the UK focuses on its competitiveness and not just rest on the laurels of those characteristics, which I think are evidently permanent but you don’t want to diminish them by not having the right [regulatory] settings.”
His comments came days after Jeremy Hunt unveiled a host of deregulatory reforms to boost Britain’s financial services industry after Brexit.
The Chancellor used his first Mansion House speech last week to announce a package that he said could unlock up to £75bn in investment to boost pension pots and drive more capital into fast-growing British businesses.
Livingstone said: “The reforms announced by the Chancellor show that the UK is asking itself questions around how to keep the capital markets here vibrant… So I think that is really positive. It’s very good to be asking hard questions and coming up with answers. London has to compete.”
Last year, Citi announced plans to embark on a £100m overhaul of its main tower in Canary Wharf in a vote of confidence in London.
Work has already begun on the 42-storey office block at 25 Canada Square, which is expected to take three years to complete. The renovation will bring it in line with new environmental standards and create flexible work and collaboration spaces.
Beyond Britain, Citi operates in two dozen countries on the Continent, with its main European bank headquartered in Dublin.
The EU has attempted to build up its own financial markets to rival the Square Mile since Brexit in an effort to shift activity from London to the Continent.
However, Livingstone said there were still significant hurdles for international banks operating within the EU.
He said: “The EU post-Brexit has got a lot to build in terms of the depth of its capital markets. It’s got a banking union and a capital markets union, both of which are not progressing as fast in terms of delivering an outcome as a place where corporate clients and institutional clients can raise capital and do it in a seamless way within the union.”
The European Commission has been attempting to force some activities to be relocated within the bloc: chiefly lucrative clearing activity centred in London.
Clearing houses act as middlemen in derivatives trades between banks and have become a vital part of the financial system since the 2008 financial crisis.
The Commission has come under fire over its plans to punish banks for failing to shift lucrative clearing activity out of the City of London.
Last year, the European Banking Federation (EBF), which represents the bloc’s major lenders, said the policy would cause “serious market disruption” and “significantly weaken the attractiveness and competitiveness” of EU clearing houses.
Livingstone said: “If they put a wall around the EU and say the EU will finance itself, we think that is not the most optimal policy setting.
“So rather than sort of say, well, should they or should they not put clearing in the EU, it’s actually looking at what’s the best way to finance European businesses.
“When we talk to the policymakers and member states, we’re stressing that really what the EU should want is [access] to capital markets internationally as well as those domestically generated in the EU for financing companies.”
Citi was one of the first international lenders to incorporate locally in mainland China in 2007 after local regulators relaxed rules to encourage foreign banks.
Despite growing geopolitical tensions between China and the West, Livingstone believes the region still represents a key growth opportunity for Citi.
He said: “The level of opportunity remains high because China still needs to mature through its banking system, securities and market systems.
“It’s growing all the time and producing larger companies and they need financing. So the outlook on that dimension remains positive. Our institutional business in China is certainly one that we anticipate will grow alongside those opportunities.
“Geopolitical tensions clearly exist but I think, on an operating level and a business level, they’re not impediments.”
Livingstone declined to comment when asked if Citi has contingency plans in place for its Chinese business in the event of Beijing invading Taiwan.
Last month, Citi informed its 9,000 UK employees that it would start holding them “accountable” for complying with the bank’s hybrid working rules. It said it would do this by starting to monitor employees’ office attendance.
Citi is more flexible than its Wall Street rivals. The bank requires staff to be at their desks at least three days a week, which is at odds with competitors like JP Morgan. The rival lender recently ordered its senior employees into the workplace five days a week.
Livingstone said: “In an organisation of our scale and dimension, there is a need for people to be together to communicate and develop internal relationships. So that absolutely is a requirement.
“However, we do recognise that the Covid experience has meant that there’s a flexibility dividend. And it’s not just the number of days out, it’s also the sort of the casual flexibility of being in on a Thursday afternoon, but not being in on a Thursday morning that is very valuable.”
Citi’s commitment to Canary Wharf comes as other major banks and law firms leave London’s Docklands in favour of the Square Mile.
Last month, HSBC announced it would ditch its 45-storey skyscraper at 8 Canada Square – nicknamed the “tower of doom” by staff – and move to a smaller site at the redeveloped former BT head office near St Paul’s.
Livingstone said of Citi’s Canary Wharf office overhaul: “We’re making this investment for 25 to 30 years. HSBC will make their own decisions. I think it’s also reducing its footprint.
“Canary Wharf is only getting better. The Elizabeth line is a game changer. The level of residential and retail properties means that it actually is much less of just an island of banks and law firms. It’s now much more diversified so, in a way, it’s more like the City.”
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