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UK's investment banks 'must be competitive'

03/04/14

Britain's investment finance sector could be placed at risk if the country continues to indulge in "bank bashing", it is claimed.

This is the suggestion made by director of Royal London Asset Management Robert Talbut, who warned that hounding the industry is placing the City "in danger".

Speaking to the Sunday Telegraph, the financial services expert noted firms such as the investment banking arm of Barclays could be chased out of London by public anger about bankers' bonuses.

Barclays was recently slated for paying large sums to staff despite seeing a dip in profits and experts have suggested negative attitudes could push it to New York until the dust settles.

"If ultimately they [Barclays] take the view that the regulatory and political pressure is going to continue unremittingly that could be the right thing for them to do," stated Mr Talbut, who is also chairman of the Association of British Insurers' investment committee.

The article also quotes chairman of The City UK and Standard Life Gerry Grimstone as flagging up the importance of London retaining its status as a major global finance centre.

He claimed: "It is very important there are strong investment banks in Britain. It is very, very important that London is one of the investment banking centres of the world."

Conservative MP Mark Garnier, who sits on the Treasury select committee in the House of Commons, said he would "feel very sorry" if banks pulled out of the UK in response to the backlash that has taken place in recent years.

A recent report on banks optimising their assets by Oliver Wyman and Morgan Stanley suggested "fixing mis-allocated resources presents an immediate opportunity for the industry" and banks could improve returns significantly by taking tough decisions this year.

It explained that European lenders had experienced a fall in revenues in previously strong areas of banking and advised organisations to refocus efforts towards their strengths.

The study recommends re-allocation and improving capacity in order to trade in areas where banks have a real advantage over competitors. It predicts companies will focus more domestically or regionally and there will leakage of value to a growing array of non-bank specialists.

 

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