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Response to Tansy_Gold (Original post)

Tue Jan 17, 2012, 08:25 AM

43. ‘Bloated’ London Banks Shrink in the City

http://www.bloomberg.com/news/2012-01-17/-bloated-london-banks-shrink-in-the-city-as-europe-takes-aim.html

London’s Square Mile is shrinking faster than any financial center in the world.

Having fired more employees than in any other country last year, the capital’s banks are facing falling trading revenue, attacks from politicians to reduce pay and more job cuts. The U.K. government wants banks to split their consumer and investment banking units while European Union leaders are pushing to tax individual trades by the end of this year.

“We’re going to end up with a smaller, more focused financial sector,” said Michael Kirkwood, 64, former head of Citigroup Inc. (C)’s U.K. division, who began his career in the Square Mile in 1965. “The entire financial world became too bloated in the run up to the financial crisis, and London was excessively bloated.”

London, the world’s biggest center for foreign-exchange trading, cross-border bank lending and interest-rate derivatives, is being squeezed by both the impact of the European sovereign-debt crisis on demand for its services and politicians who blame financiers for bringing the world economy to the brink of collapse. Banks are responding to the Basel Committee on Banking Supervision’s latest rules by exiting capital-intensive activities such as proprietary trading, putting at risk the U.K.’s biggest exporting industry and 12 percent of its tax receipts.

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