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Bloomberg says Barclays would feel at home in New York
NEW YORK/DUBLIN |
NEW YORK/DUBLIN (Reuters) - New York would welcome Barclays Plc (BARC.L) if the bank decided to move its headquarters from Britain, the city's mayor said, in comments that suggested the Big Apple might be courting the bank.
Barclays is considering moving its headquarters from London to dodge British capital rules, which the bank sees as onerous, people familiar with the matter said. The loss of the more than 300-year-old bank would be a blow to London's prestige as a financial center. Other banks are also considering leaving the City.
New York City Mayor Michael Bloomberg said the city is not offering any special incentives for Barclays to relocate, but would be delighted to become its new home.
"It would be a great move for them to move here," Bloomberg said at a press briefing. "I hope they move here; it'd be great for us.
At a conference in London, Barclays Chief Executive Robert Diamond said the bank is looking at options.
"It's our obligation on behalf of shareholders to look at the alternatives," he said.
But Barclays hopes not to move.
"This is home and where we want to stay," he added.
The bank has had preliminary conversations about a move with U.S. regulatory officials. It is conducting an analysis of whether switching its domicile makes sense, the Wall Street Journal said on Wednesday.
Some analysts questioned whether Barclays really would move. It would likely antagonize the regulators of its depository bank, who could retaliate with higher insurance charges, said one former strategist for a bank in New York.
If Barclays did relocate its headquarters, it would create a loss of major tax revenue for London and a windfall for New York City, said Selwyn Blair-Ford, head of global regulatory policy at the consulting firm FRSGlobal in London.
Last year, Barclays paid 6.1 billion pounds ($9.8 billion) in global taxes, 2.8 billion pounds of which went to Britain, according to Barclays' annual report.
The latest speculation was prompted by a report by analysts at UBS rather than by any major change internally, a person familiar with the matter said.
UBS analysts wrote in a note on Tuesday: "While staff compensation is driven by international comparisons, rewards to shareholders look increasingly determined by local regulators. If this difference becomes permanent, we think Barclays has little option but to consider shifting domicile."
Barclays declined to comment.
Barclays Capital took over New York-based Lehman Brothers in 2008, so a move to the Big Apple would be a homecoming for some portions of the bank.
London and New York have for years been fighting to claim the title of financial capital of the world. In 2007, senior U.S. banking executives met then Treasury Secretary Hank Paulson to discuss whether New York was losing its edge.
British banking regulators have indicated banks should hold core Tier 1 capital ratios of nearly 10 percent, above the 7 percent dictated by global regulators.
The Independent Commission on Banking (ICB) is also considering forcing banks to separately capitalize their investment banks, which could cost banks billions of pounds in holding extra capital.
Barclays has considered moving before and had planned to move its headquarters to Amsterdam as part of its unsuccessful attempt to buy Dutch bank ABN Amro four years ago.
It is not alone in considering whether to leave London now.
HSBC Holdings Plc (HSBA.L) Chairman Douglas Flint told investors at a conference on Tuesday that, if the ICB made banks separately capitalize their investment banking business, British banks could lose customers and would "take decisions to protect their economic activity.
Rival Standard Chartered Plc (STAN.L) has also said London has become a less attractive place to be based, as regulations have become more onerous.
UBS analysts said Barclays' increasingly important overseas business and its growing American investment banking presence make it similar to Wall Street bank JPMorgan Chase & Co (JPM.N), which was allowed last week to increase its dividend.
"While the Fed has signed JPM off to reinstate meaningful distributions to shareholders, Barclays remains mired in the fog of regulatory uncertainty," the note said.
If Barclays did move its headquarters to the United States, it could cost the company several hundreds of millions of pounds plus another 30 million pounds ($48 million) in preparatory work, the Journal said.
The ICB does not release its final report until September and banks are not expected to make any decision before then.
In New York, it is not just the mayor who would love to see Barclays come to town.
Kathryn Wylde, president of the pro-business Partnership for New York City, said she is encouraged by the reports of Barclays' possible move as well. She noted New York offers an incentive program, known as Excelsior, that includes tax credits for new job creation.
"Barclays is a leading global institution that has already made a big investment in New York," Wylde said in a comment emailed to Reuters. "Winning their headquarters would be a major plus for our status as a financial center."
(Additional reporting by Lauren Tara LaCapra and Joan Gralla in New York and Sudip Kar-Gupta in London; editing by Louise Heavens, Mike Nesbit, Gerald E. McCormick and Andre Grenon)
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