Global business migration to London to benefit Ireland, says City mayor

The Irish financial services industry will benefit from global businesses moving to London, even though the two centres compete for similar business, according to the new lord mayor of the City of London.

Banker Roger Gifford, who assumed the figurehead job for the UK financial services industry last week, said London competed with Singapore and Hong Kong rather than Frankfurt, Paris and Dublin for business.

But attracting business from Russia, Asia and South America to London could lead to asset management firms being established and assets being booked in Ireland to avail of a low corporate tax rate, he said on a two-day visit to Dublin yesterday.

London is against the proposed European tax on financial transactions, fearing it would damage the city’s standing as a global financial centre, he said.

The Government also opposes the tax on the basis that it is not supported by the UK, given how London and Dublin compete.

“London is particularly against it because it is a tax on London, because so much of Europe’s financial services business goes through London,” said Mr Gifford on his first overseas visit as lord mayor.

The first banker to hold the 800-year-old job in eight years, Mr Gifford is head of the British arm of Swedish bank SEB, where has worked for 30 years.

He said nearby countries could benefit from London’s role as “a gateway to Europe” for new global businesses setting up.

“We also hope that they will look around at the benefits of having a low-tax environment in Ireland, cheaper labour in Scotland and developing their Ucits funds business out of Luxembourg,” he said.

“Of course, we are very pro-London but we are much keener on getting global flows and global business to this part of the world and then we are all going to benefit, and then we are going to argue like hell about who does what and gets what.”

Mr Gifford met the Minister for Finance Michael Noonan, Central Bank governor Patrick Honohan and representatives from the IFSC on his short visit.

As he takes over as the champion of an industry that is still reeling from a rate-fixing scandal and revelations about Mexican drug money-laundering, he said bankers made “dreadful and silly mistakes”.

But he defended bankers’ pay, saying banks had to pay for skilled staff. “The best thing is for the market to take the decision,” he said.

More oversight

He does not believe regulation has become too intrusive since the crisis but supervisors were taking on more oversight rather becoming a “perfunctory box-ticking agency”, he said.

London will “tactically have to play it by ear” on the proposed single euro-area banking supervisor, given its complexity, said Mark Boleat, deputy chairman of the City’s policy and resources committee, who accompanied Mr Gifford.

“In all the messages we are getting from Europe is [the view] that they want London to be fully involved,” he said. “They cannot exclude us from those discussions because it is a financial centre.”