PBI conference: London to remain key wealth hub – despite Brexit
London will still be a key financial centre – as Brexit unfolds – delegates at the recent Private Banking and Wealth Management London 2018 conference have heard.
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Speaking to a packed audience of approximately 200 people on 7 June at The Waldorf Hilton hotel in London, Paul Kearney, managing director at Kleinwort Hambros, said: “Our colleagues in rival EU bases said they see London as a location favoured by the UHNW client base. Of our European colleagues, the only country which didn’t see London as competition was Switzerland.”
However, Kearney warned: “Brexit vote has had an impact of anti-European sentiment and isolationism.”
Kearney added: “As a consequence of that they thought London was possibly losing its image as a stable jurisdiction and itself was creating heightened geopolitical risk.”
He cited findings by Boston Consulting Group that indicated global private wealth to be $167trn in 2016 with wealth is expected to accelerate to $223trn by the end of 2021.
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By GlobalDataKearney said with global wealth expected to accelerate, London would still be a key financial centre.
Kearney added: “Household wealth in the UK is around $18trn. Around 45% of that is physical wealth. Perhaps 40% is real estate.”
Kearney continued: “Around 20% of western EU wealth is captured in the UK.”
Kearney explained that the UK is perceived as having one of the strictest regulatory regimes compared to the rest of Europe.
He referred to MIFID 2- which came into effect in January this year- saying that the approach to the regulation in other parts of Europe is much more relaxed compared to the UK approach.
Trade War
Aside from Brexit, there are fears that a global trade war, initiated by the US could pose significant economic damage to the global wealth management industry.
This comes as US president Donald Trump has imposed tariffs on steel and aluminium imports from the EU, Canada and Mexico.
The EU, Canada and Mexico — have vowed to impose retaliatory tariffs on scores of US products beginning in the coming weeks. This follows tariffs imposed by USA on Chinese exports in early 2018.
David Stubbs, head of client investment strategy at J.P. Morgan, told the PBI London audience: “We believe we are going to see a period of rolling trade skirmishes rather than a war.
“Uncertainties about policies will be one of the biggest drivers of the markets.
“The one thing this president [President Trump] has always believed is that the trade deals they were signing were inappropriate.”
Stubbs added: “It might sound controversial or somewhat unexpected for me to say this, but the president does really have a point. There is really something quite skewed with America’s trade relations with almost every country.
“The tariffs applied to US goods are greater than applied by the US.”
Stubbs continued: “This is probably going to have less influence on markets over time, but there will be a significant increase in volatility going forward.”
