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Goldman Sachs commits to UK despite Brexit

Investment bank Goldman Sachs has agreed to sell and leaseback its new headquarters in a boost for London as Britain leaves the EU.

Goldman Sachs is selling its Plumtree Court office to Korea’s National Pension Service in a deal valued at £1.16bn. It plans to lease the building for 25 years, although it has an option to leave or stay after 20 years.

Doubts about the future of the new headquarters had been lingering as the investment bank’s chief executive had called for a second referendum.

The US banking giant has 6,000 employees in London based across three sites and hopes to move in the middle of next year. The 10-storey, 826,000 sq ft site can accommodate up to 8,000 people.

Richard Gnodde, chief executive of Goldman Sachs International, said: “The development of Plumtree Court and our signing of a long-term lease demonstrates our continued commitment to London and our European operations more broadly.”

Chief executive Lloyd Blankfein, who will leave the Wall Street behemoth in October, had cast doubt on the investment banks status in the country.

The company has said it plans to move a few hundred staff members to Frankfurt and Paris, without giving an exact number.

Mr Blankfein tweeted he’ll be spending more time in Frankfurt last October.

And a few days later, he wrote: “In London. GS still investing in our new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control. #Brexit”.

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UK could lose £10bn a year in City-related tax revenue after Brexit

A leading City figure whose former role involved governing the Square Mile has said Brexit could result in the loss of 75,000 jobs and up to £10bn in annual tax revenue.

Sir Mark Boleat, who was chairman of the City of London Corporation until last year, said a seepage of jobs from the capital was already underway and that the political rows over a deal or no-deal outcome was now “irrelevant” to City chief executives.

Banks including JP Morgan, Lloyds, Barclays, HSBC and Goldman Sachs have already established subsidiaries in other EU countries, or moved part of their business because EU law requires them to be legally compliant from the day the UK leaves.

“It is no longer contingency planning. If you are running a bank it is non-negotiable. The regulators won’t allow it,” he said.

In an interview with Advisory Excellence before a keynote speech on Wednesday at the Cass Business School in London, Boleat said the City would not die as the financial capital of Europe but would be damaged by Brexit.

“These moves are bad for London, but they are also bad for the EU because they will make financial markets less efficient,” he said. “Financial services will be fine, but I would say if the City has 80% of international business now, in future it will have maybe 60%.”

Boleat said Brexit has prompted expensive and unwelcome processes and the damage would be seen over the decade to come.

“This is a 10-year operation. In the short term it won’t be noticeable in terms of staff. Banks won’t be putting out press releases saying they are moving some of their operations because of Brexit because they don’t want the publicity. They are just getting on with it.

“Moving costs millions. Banks have had teams of 100 working on Brexit. It is an expensive process. You have to identify which city to go to, applying for a [banking] licence costs millions, then you have to find the IT staff, find accommodation.”

He also believes the government is in such disarray that the Brexit deal will be pushed back to December, leaving business planning elsewhere perilously close to exiting the EU.

In his address, Boleat will say he does not think financial services will get a special passporting deal to allow them to continue pan-European services from London and that banks are already past that moment of truth, whatever politicians think.

“Those who suggested that some business would move were accused of scaremongering,” he will say before listing 15 major banks and financial services who have already set up on the continent or Dublin.

He will quote a report by the Oliver Wyman consultancy that says if the UK strikes a deal giving full market access, the impact on the City would be modest, the equivalent of 3,000-4,000 jobs and a loss of £500m in tax a year to the Exchequer.

“At the other end of the spectrum if the UK had no special status with the EU, now the most likely option, the industry would lost £18bn a year in revenue which would put 31,000 to 35,000 jobs at risk along with £3.5bn to £5bn in tax revenue.”

Add the knock-on effect for related industries and the loss of entire business units, there is an estimated further losses of £14bn to £18bn in revenue and 34,000 to 40,000 jobs and £5bn in tax.

Asked whether the government was aware of the daily bleed of financial services to the rest of the EU, Boleat said: “Not enough, that’s the worry. It needs business to talk to MPs, not to give their view on Brexit, but to explain to them ‘this is what I am having to do because of Brexit’. This is not scaremongering, this is reality.”

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Deutsche Bank’s head of corporate finance in London departs

The former Goldman Sachs partner brought in revive to Deutsche Bank’s investment banking business in London has left in the latest of a series of senior departures at the German lender.

Alasdair Warren, the big name investment banker hired two years ago as head of corporate finance for Europe, the Middle East and Africa, has departed, as Deutsche continues to strip away management layers under a strategy laid out by new CEO Christian Sewing.

Warren is leaving to “pursue other opportunities”, according to a memo sent to staff yesterday, seen by Advisory Excellence. His responsibilities will be taken on by Mark Fedorcik, currently co-president of the investment bank and the former head of corporate finance for the Americas, who will add Emea to his role.

“I am grateful to Alasdair for his contributions to Deutsche Bank over the past two years or so,” Garth Ritchie, head of Deutsche’s corporate and investment bank, wrote in the memo.

Warren, the former co-head of the financial institutions group at Goldman Sachs, was brought in by former CEO John Cryan, who was ousted in April as part of a broad range of changes at the top of the troubled lender.

Warren oversaw some significant recruits in Deutsche’s European investment bank as it struggled to maintain its formerly dominant position in the league tables. Robin Rousseau joined from Goldman Sachs in June 2017 to head M&A in Emea, while Thomas Piquemal was hired from EDF Energy as global head of M&A and country manager for France. He has since left the bank.

Deutsche Bank has also split the co-head of Emea corporate finance role, promoting Adam Bagshaw, global co-head of private equity and Nick Jansa, co-head of global leveraged debt capital markets. They will report into Fedorcik.

Ritchie added in the memo that “further organisation details from the [corporate finance] leadership will follow in due course.”

Sewing said during the bank’s annual general meeting last month that it was seeking to “de-layer” the management team across the corporate and investment bank, and its commercial and private bank. “Smaller committees, less hierarchy and more individual responsibility — that’s our motto,” he said.

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Revealed: Germany’s Berenberg targets UK expansion amid M&A boom

Germany-based investment bank Berenberg is one City firm taking Brexit in its stride.

The Hamburg firm, the world’s oldest merchant bank having been founded in 1590, has grown its Square Mile office from 70 to 350 people in the last eight years.

It expects to add up to 100 more London staff over the next 18 months as it targets work on an expected UK boom in corporate takeovers and an anticipated spike in demand for equities analysis after a recent EU regulatory overhaul.

“The partners back at our headquarters in Hamburg have been relaxed both pre- and post-referendum about Brexit,” said Dave Mortlock, head of Berenberg’s London office.

“We have our plan [to grow in the UK] and will look to deliver on that.”

Mr Mortlock said the firm’s existing operations in Germany, from which it can continue to trade across the EU bloc regardless of the outcome of Brexit trade negotiations, meant there was “no obvious reason for us to reshape at all”.

“If other firms leave, we have the opportunity to attract their best talent,” he added.

His comments strike a contrast with other overseas banks in the City, many of which – including Goldman Sachs, JP Morgan and UBS – have said they will downsize due to Brexit.

Mr Mortlock said Berenberg’s London office would look to more than double the amount of corporate deals it advises on from 17 last year to 50 this year.

Global dealmaking has enjoyed its strongest start to a year in almost two decades, with the value of targeted deals in the UK jumping a third on last year to $21bn (£14.9bn), latest statistics from Dealogic revealed this weekend.

The lion’s share of Berenberg’s work in London is in equities analysis. Mr Mortlock said a recent move by the EU to tighten regulation in this market, called Mifid II, had so far increased demand for its analysis.

Under the changes analysts must explicitly charge customers for their advice, rather than bundling it up with other services.

Mr Mortlock said: “This is a fundamental change for the industry. It’s a challenge and it will take capacity out of the market. But I’m satisfied those that commit like us will get out of it in good shape.”

In full-year results for 2017 Berenberg posted a 69pc rise in equities revenue to €240m (£212m), while its overall staff numbers increased by 70 to 1,576.

Net profits were down 44pc to €90m, although the bank said the previous year’s results were skewed by a one-off gain on the sale of its share in Frankfurt-based investment company Universal Investment.

Cryptocurrency News: Bitcoin’s rollercoaster ride after hitting $17,000

Bitcoin continued its rollercoaster ride on Friday, briefly crossing the $17,000 (£12,615) mark before plunging more than $2,500.

The digital currency breached new highs before falling below $14,500, down 14% on the day according to Coindesk.com.

Bitcoin had soared about 70% this week, with its dramatic rise being likened to a “charging train with no brakes”.

As concerns mount, an industry group has warned plans to start Bitcoin futures trading have been “rushed”.

Critics have said Bitcoin is going through a bubble similar to the dotcom boom, but others argue it is rising in price because it is crossing into the financial mainstream.

“Bitcoin now seems like a charging train with no brakes,” said Shane Chanel, from Sydney-based ASR Wealth Advisers.

The surging price of Bitcoin has been helped by the start of trading on the Chicago-based Cboe Futures Exchange on Sunday. The world’s largest futures exchange, CME, will begin its Bitcoin offering a week later.

Trading on futures exchanges allows investors to buy and sell contracts for the crypto-currency at a certain point in the future at an agreed price.

But the Futures Industry Association, which includes Wall Street’s largest banks, brokers and traders, has written to the US regulator over concerns that the contracts were approved “without properly weighing the risks”.

“A more thorough and considered process would have allowed for a robust public discussion among clearing member firms, exchanges and clearing houses,” the association said.

While Goldman Sachs is a member of the association, it is also one of the banks that will work as an intermediary to help clear Bitcoin futures contracts for some clients.

A spokeswoman for the investment bank said it was evaluating the risks as part of its due diligence process.

Many big investors have been reluctant to pile into the cryptocurrency market unless it is regulated.

However, the prospect of a Bitcoin futures market has raised hopes that it will be regarded as sufficiently “regulated”.

‘Major gamble’

While Bitcoin has become more mainstream in recent weeks, many observers warn the market could be a bubble waiting to pop.

“Bitcoin remains a major gamble as it is very much an asset that remains in uncharted waters, we’ve simply not experienced this before,” said Nigel Green, founder and chief executive of deVere Group.

“An asset that goes almost vertically up should typically raise alarm bells for investors.”

Even a crash or a major correction is unlikely to pose risks to the global economy, some analysts say.

While billions of dollars have been invested in Bitcoin, its $268bn total market value is still small compared to other asset classes.

A View from the Top: Janet Cooper OBE, founder of Tapestry Compliance LLP

At Tapestry, a law firm based in Yorkshire, 75 per cent of staff and 85 per cent of senior staff are female.

Janet Cooper was into flexible working long before it was fashionable. She joined Linklaters, a leading law firm headquartered in London, as a trainee lawyer in 1984 and made partner in 1991, in the shortest time possible. A couple of years later, she faced losing one of her best lawyers because the woman in question was about to have her second child at the same time as her husband was relocated away from London.

“She was going to leave to get a job locally, but we made it work so that she could work flexibly,” Cooper says. “She’s actually still at Linklaters, which shows the power of working this way.”

Flexible working became the heart of Cooper’s philosophy when she set up her own firm called Tapestry Compliance with Bob Grayson, a former in-house counsel of Shell, in 2011. Tapestry has just been awarded the Queen’s Award for Enterprise, the highest award for British businesses, for its significant growth in overseas sales of some of the world’s biggest companies. Cooper herself was awarded an OBE in the New Years’ Honours list for services to equality, women’s empowerment and employee share ownership.

While London has long laid claim to the country’s best law firms, Tapestry, which is based in Yorkshire, bucks the trend. Two offices in Sheffield and Leeds have hoovered up top staff from magic circle firms looking to live outside the capital.

Cooper says she wanted to start a firm in the north of England because of her own experience as a trainee lawyer. “Back in the day to get a good job in corporate law you had to go to London. So I went down to Linklaters,” she remembers. “I had to leave all my lovely family and friends to get the job. These days with technology you don’t have to. So my goal was to create jobs in Yorkshire so people didn’t need to leave.”

Born in Warrington, but brought up near Huddersfield, Cooper never expected to become a lawyer. Her mother managed a coffee shop in Huddersfield and her father managed a steel mill. She left school at 16 and did A-levels and an OND in business studies at c before joining Rowntree Mackintosh, the sweet company, as a secretary in Halifax.

It was at college that a teacher called Bernard Atha, a former Lord Mayor of Leeds known for supporting minorities and those with disabilities, encouraged her to pursue law. Atha helped her find a suitable university and they landed on Leeds. Cooper stayed in Yorkshire to do her training contract and then left for London when she qualified.

Though her career would bring her full circle, offering women not so different from herself a great career in Yorkshire, her home remains in London. She talks to The Independent from her desk at home in Ealing Broadway, where she works remotely and lives with David Geake, her husband of almost 35 years, who is a retired lawyer.

She visits the two company offices and the 30 staff often. Bob Grayson, her partner, built the team up in Sheffield and runs the office from day to day, while Cooper spends a lot of time abroad working with the big clients the firm is now known for.

Grayson’s experience of managing major global projects, combined with Cooper’s expertise as global head of a magic circle employee share plans department, has attracted clients including Goldman Sachs, Morgan Stanley, HSBC, Aviva and Dell. Seventy per cent of Tapestry’s business came from the US in the last year, with other clients in Canada, Switzerland, Finland, Germany and Japan.

Clients are also attracted by fees up to 40 per cent cheaper than the competition. “Being based in Yorkshire means we’re so much more cost effective,” Cooper says. “Rent is so much cheaper up there and that makes it cheaper for our clients.”

Cooper credits Tapestry’s flexible working strategy for helping parents especially to keep working after the birth of a child. This has led to an impressive retention record: only one staff member has left in the last six years, while fifty per cent of the firm’s work comes from repeat business.

Three quarters of the staff are female and Cooper says the proportion is even greater for senior management, which is 85 per cent female. “There are issues in all City firms about retaining and promoting women when most of the City firms have less than 20 per cent women partners,” she later tells me via e-mail. “That masks that even fewer women make it to senior management in law firms or as General Counsel.”

Not all those making use of flexible working are parents. Rebecca Campsall joined the firm as a legal trainee just as her athletics career was taking off. Now she’s ranked 11th for the 100 metre sprint in the UK. She hopes to compete in the 2018 Commonwealth Games in Australia and later in the 2020 Olympics. Campsall trains every evening and every Sunday and in two years, she has never missed a session.

“In terms of England selections, they really don’t give you much notice, so I could be told on Thursday, ‘On Friday you’re flying out to Bratislava.’ In a normal workplace that would be really difficult,” Campsall says. When a consultant recommended Tapestry for the flexible working, Campsall made sure to be open about her training schedule in the interview.

“A lot of firms can promise that it will be ok, but it was clear when I came here that this was the only place where I found that it was encouraged,” she says.

A quarter of British women do not return to work after childbirth and the pay gap gets increasingly wider for those who do, with women earning on average 17.5 per cent less than men in their forties, according to research by the Trades Union Congress.

Cooper, who does not have children, says she hasn’t experienced sexism at work. “Linklaters were a good firm for promoting merit. I wouldn’t say it was the same for everybody, but I was very grateful for them,” she says. “But it was very unusual going into a room where you weren’t the only women at the table.”

Nonetheless she recognises that at some firms, having a baby is assumed to mean that a lawyer wants to do less. “We need to understand the unconscious biases that go on in decision-making about promotions and assignments,” she says. “Particularly if a lawyer has children there may be the assumption that they don’t want training or to spend a lot of time abroad. I don’t agree with quotas but I do think things need to be improved.”

Tapestry hopes to show through its flexible policy that parents, and women especially, can be excellent lawyers if they are given the chance to thrive at a time when 60 per cent of law graduates are female, according to the Law Society, while only 27 per cent of partners are women in firms of over 50 people.

“My mother left school at 13 and was a very smart lady but didn’t have the opportunities I have had,” says Cooper, who was once on the UK board of UN Women, the United Nations for Gender Equality. “I am very keen to support women to reach their potential.”