If the Americans and Europeans chose London then the Japanese and other Asian economies must follow in their wake

If the Americans and Europeans chose London, then the Japanese and other Asian economies must follow in their wake. It won’t happen overnight, it may even take several decades, but I’m beginning to think that the City might one day get overtaken and eventually trounced.
This needs some explaining, for at the moment all the evidence rather points in the other direction.Nearly all the big continental players with investment banking and capital market pretensions have chosen London as their European base for these activities. And so on and so forth.So attractive has the City’s formula become that a number of US investment bankers have gone beyond merely using London as a base for European business, and begun quietly shifting international operations, where location is unimportant, away from their financial centre of domicile and into London.At the World Economic Forum in Davos, Switzerland, this week, one leading US investment banker admitted privately that he had become so disillusioned with the byzantine capital and regulatory requirements of New York, that significant parts of his bank’s derivatives book would be moved to London over the next year.After an exhaustive study of more than 50 possible alternative locations, including a number of offshore centres, he had concluded that the City had the most attractive combination of regulatory requirements and trading infrastructure anywhere in the world.Does that mean, then, that foreigners come to London because of its relative lack of regulation compared to rivals? Not at all, he insisted This was not an attempt to escape regulation. Because of language and cultural ties, the City also makes an obvious choice of location for US investment and commercial bankers This creates a snow ball effect. Furthermore, the argument goes, the City’s position might actually be enhanced if Britain stays out of the single currency; it would positively thrive as an entrepot between Europe and the rest of the world.

Is this all just complacency, or is London’s position in financial markets indeed an unassailable one? Until quite recently I would have argued the latter, but I’m now I’m not so sure. Can the City hope to survive as Europe’s pre eminent financial centre after monetary union? The general view in the City, shared and articulated by Eddie George, Governor of the Bank of England, is that it can; that it is so far ahead in terms of infrastructure and critical mass of Frankfurt, Paris and Milan that none of them is capable of catching up. Last month 18 institutions put their names to a letter condemning the plans as a “blatant disregard” of their interests.The news came after independent directors of Astec opposed to Emerson’s plans yesterday called on shareholders to consider the legal position.The directors, led by deputy chairman Peter Marshall, who was deputy chief executive of the former Plessey electronics and defence business, said dissident directors were prevented from going to court themselves under company law.Although Emerson has not launched a formal offer to take full control of Astec, it outlined an indicative bid to buy the shares at the current market price, which yesterday fell 0.5p to 124p.. Royal & Sun Alliance and Electra Fleming, two of the company’s biggest institutional investors, stepped up the pressure on Emerson, the US engineering giant which controls 51 per cent of Astec. Emerson astonished non-executive directors of Astec last month when it announced plans to buy out minority investors, remove three executive directors from the board and stop paying out dividends.
The two shareholders last night said they were “considering court proceedings” against Emerson under section 459 of the Companies Act, which deals with attempts by big investors to prejudice the interests of other shareholders.In a statement Royal & Sun Alliance, which speaks for just over 5 per cent of Astec, added that Emerson was “considered to be influencing the affairs of the company to the detriment of other shareholders.”The institution cited the move by Emerson to call an extraordinary shareholders’ meeting to approve the changes. An acrimonious boardroom split at Astec (BSR), the power supply manufacturer, intensified yesterday after two leading shareholders revealed they were considering going to court to resolve a dispute over future control of the company. But the network had missed the crucial December deadline for sorting out 90 per cent of the most urgent cases.a fine recordCompany Date Fine (pounds )London & Manchester 28/1/98 525,000Friends Provident 30/9/97 450,000DBS Financial Management 3/9/97 425,000Albany Life 2/12/97 375,000Countrywide 6/2/98 250,000M&E Network 14/8/97 100,000Lincoln Independent 8/7/97 75,000Berkeley Independent 23/4/97 70,000Source: PIA.

In contrast, the country’s largest network, DBS, a quoted company, was fined pounds 425,000. DBS had failed to admit its failings and co-operate fully with the PIA.The fine is the fifth largest to be levied over mis-selling. Among the criteria used to decide the fine were the severity of the mis-selling, the firm’s size and its attitude to the regulator.However, the PIA pointed out that it had been aware of the need to clear up the cases more than two and a half years before, when regulators began the effort to clear up the scandal.The regulator said Countrywide had now increased resources dedicated to compensating customers. Shares in Boots, owner of Do it All, jumped 38.5p to 893p, and Kingfisher, which runs B&Q, rose 16p to 987p.However Sainsbury, once Britain’s most popular grocer, is falling further behind arch rival Tesco which is now by far the biggest food retailer in the country with more than 15 per cent of the market. Like-for-like supermarket sales growth slowed to 3.2 per cent in the 16 weeks to 10 January, compared to the 5 per cent growth the company was achieving last year.The figure is well short of the 6.5 per cent that Tesco announced recently But Sainsbury said gross margins had held firm. A Sainsbury spokesman said: “We are looking to build up our personal loans and mortgage business, lending more of the money we have on deposit.”There was also a strong performance from Homebase, the DIY retailer, where buoyant Christmas trading helped like-for-like sales rise 9.8 per cent The good figures spread optimism around the DIY sector.