Investors pulling money out of The City pose a greater risk to London’s financial dominance than banks exiting the UK because of Brexit, according to Square Mile official, Sherry Madera, the City of London Corporation’s special adviser for Asia.
Retaining business volumes should be the focus as opposed to banking jobs because transactions underpin the financial centre’s success. Her comments came as she shed light on how Asian nations view Brexit, with Singapore seeing the divorce as a “net gainer” in its attempts to bolster its position as a global financial centre.
“As much as we talk about the qualitative reasons for London being a global financial centre, it does come down to that density of practitioners and the volume of transactions. If we take care of those and we take care of our investors who come here to take advantage of that, in some ways the rest takes care of itself”, sais Ms Madera.
“If we think about banks leaving the City of London, or leaving the UK, actually what we should be more concerned with is investors leaving.”
“Because the banks are here to service the investors, professional services firms are here to service investors, the entire ecosystem is here to make sure that money is used as efficiently, effectively and profitably.”
“The investors are driving this. So keeping an eye on that is going to be really important, the retention and the volume there.”
Ms Madera, who joined the authority after serving as minister-counselor and director of the British Embassy in Beijing, said China and India had a more “relaxed” view on Brexit because they have financial operations spread throughout the UK and Europe.
While the two nations saw Europe “as a place to play”, she said London remained the location where they wanted to do global business. However, she said Chinese banks had used Brexit uncertainty to acquire talent within the City of London.
The 43-year-old, who has a dual British Canadian citizenship, added: “Chinese banks are seeing a great opportunity to hire great talent who (think) now could be an interesting time to shift to an international player. They are finding this environment of uncertainty to be an opportunity”.
In contrast to China’s measured perspective, Japan has been more bullish on Brexit.
The country, which heavily invested in London as a financial gateway to Europe, sent a letter to the Government urging Britain to keep free movement of people and remain in the single market and customs union. Despite this political pressure, Japanese banks have started to bulk up their operations outside the UK capital.
Investment bank Mizuho Securities announced last week that it plans to set up a subsidiary in Frankfurt to secure its EU client base after Brexit. It joins a string of Japanese banks who have chosen the German financial centre as an EU hub, including Daiwa, Sumitomo Mitsui Financial Group (SMFG) and Nomura.
Focusing on Singapore, Ms Madera said the nation sees Brexit as a chance to win more business from London. While London has a long-standing reputation as a global leader in green finance, Ms Madera said Singapore was now making a strong play to gain more business in that field.
She said: “Singapore is really heavily promoting green bonds on its own exchange and providing incentives for issuing green bonds in the country. “Singapore has also done a fantastic job of really coalescing its promotion, its incentives and its regulation around attracting fin-tech.”