02 September 2013

Evening Standard: EU pullout would spark a City exodus — Goldman

Michael Sherwood and Richard Gnodde, the co-chief executives of Goldman Sachs International, said they would have to make plans to relocate swathes of staff from the capital so they could maintain their access to the European economy. “We are going to be part of that economy. There is no scenario under which we will not be participating”, said Sherwood, who is also a vice-chairman of Goldman Sachs.

Gnodde underlined how much London’s financial centre has benefited from the creation of the euro, with the capital becoming the engine room to the money markets of Europe, the world’s largest economy. “There is a huge amount that is still all to play for in the City”, he said. “With this whole shift in the European economy being financed away from the banks and instead raising money in the capital markets, this growth story is not even halfway done.”

London’s success has made it a magnet for Continental banks, such as Deutsche Bank, which has its investment banking headquarters here, and France’s BNP Paribas.

The importance of London to Goldman is underlined by the fact it houses 6,000 of its 7,000-strong European workforce here. That means 85 per cent of the bank’s European staff are employed here, despite only 35 per cent of client revenues coming from London. Global banks’ workers used to be far more diffuse, but trading outposts in cities such as Milan have gradually closed.

If Britain pulled out of Europe, Goldman could look at leaving its trading desk in London but distributing sales teams across the Continent so it could “passport” into each of the 28 EU markets.

The price for remaining in the EU is to put up with a new wave of regulations being devised in Europe, such as limits on bonus payments and the threat of a financial transactions tax. Both bankers have the working assumption that the single currency will be preserved and that Britain will vote to remain in the EU.

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