WEBVTT - 'Big Bang' News. Or is It? 0:00:00.520 --> 0:00:02.840 Catherine. We haven't had you on the podcast for three weeks. 0:00:02.920 --> 0:00:10.000 Have you been every week? I hope? And so I'm 0:00:10.080 --> 0:00:12.800 very excited today our prayers have been answered. Right, We've 0:00:12.800 --> 0:00:16.240 got some news, big news, big bang news, in fact, 0:00:16.400 --> 0:00:20.919 big bang news. Although I guess we're slightly wondering is 0:00:20.960 --> 0:00:23.799 it is it a small whimper that they're trying to 0:00:23.840 --> 0:00:26.800 package is a big bang? Now we're in that territory. 0:00:27.480 --> 0:00:30.240 That is the question, right when is a big bang 0:00:30.440 --> 0:00:32.920 a small whimper? I think that's what you need to like. 0:00:32.960 --> 0:00:36.080 This is such a philosophical question. Stay tuned for the answer. 0:00:42.600 --> 0:00:45.599 I'm David Merritts and I'm Francine Laqua and this is 0:00:45.680 --> 0:00:48.240 In the City, Bloomberg's podcast, connecting you to the stories 0:00:48.280 --> 0:00:51.240 and the voices at the heart of the City of London. 0:00:51.440 --> 0:00:54.280 This week Big Bang two point oh, it's back, Dave, 0:00:54.400 --> 0:00:57.880 of course, being the long promised relaxation of post brexit 0:00:57.960 --> 0:01:01.279 financial services rules. That's everyone in the city has been 0:01:01.280 --> 0:01:03.960 waiting for this and we've had a big step forward 0:01:04.040 --> 0:01:06.480 this week. We voted for Brexit and now there's an 0:01:06.480 --> 0:01:10.200 opportunity to sweep aside unnecessary rules and regulations that were 0:01:10.240 --> 0:01:13.320 holding back economic growth, So what will they mean Dave. 0:01:13.480 --> 0:01:16.039 My conversation also with the newest Lord Mayor of the 0:01:16.040 --> 0:01:19.280 City of London, Nicholas Lions. He shows his vision for 0:01:19.319 --> 0:01:22.360 elevating the city during his year as Lord Mayor. And 0:01:22.400 --> 0:01:24.920 then this week's big news, we have the relaxing of 0:01:24.959 --> 0:01:27.680 what is called the ring fencing of banks. That was 0:01:27.720 --> 0:01:30.679 a rule brought in after the financial crisis of two 0:01:30.680 --> 0:01:33.600 thousand and eight. Seems that is about to be scrapped. 0:01:33.600 --> 0:01:37.240 So we're going to talk to Bloomberg's Finance editor Katherine Griffiths, 0:01:37.240 --> 0:01:40.440 who will walk us through what ring fencing is, why 0:01:40.520 --> 0:01:42.880 there's been a change of heart, and how the UK 0:01:43.040 --> 0:01:47.640 plans to turn this into its next big bang. So Catherine, 0:01:47.640 --> 0:01:51.360 welcome to the podcast. We may no longer have ring 0:01:51.400 --> 0:01:53.440 fencing in the UK. Is that a real game changer 0:01:53.480 --> 0:01:57.160 for banks? Yes, Um, it would be a big game 0:01:57.240 --> 0:02:00.760 changer if they really did take down the ring fence. Um. 0:02:00.800 --> 0:02:03.960 I think quite possibly they'll do something smaller than that. 0:02:04.480 --> 0:02:07.760 They may mess around with the level that the ring 0:02:07.840 --> 0:02:11.359 fence kicks in at, which is billion pounds of deposits. 0:02:11.880 --> 0:02:14.280 They may mess around with the rules so that it's 0:02:14.320 --> 0:02:16.840 easier for banks to sort of serve customers that fall 0:02:16.919 --> 0:02:20.200 on either side of the ring fence. Um, they may 0:02:20.280 --> 0:02:23.919 exempt kind of smaller banks that don't do anything risky. 0:02:24.080 --> 0:02:26.560 We're not quite sure at this point. So just to 0:02:26.639 --> 0:02:28.600 explain to all to our listeners who might not be 0:02:28.680 --> 0:02:32.240 back clear what ring fencing is, Katherine, this was the idea. 0:02:32.280 --> 0:02:36.960 The idea was to separate out retail banking, so general 0:02:37.000 --> 0:02:39.400 consumers and their bank accounts from the kind of the 0:02:39.480 --> 0:02:42.040 risky stuff, right investment banking and all the stuff that 0:02:42.080 --> 0:02:43.800 blew up in two thousand and eight. Can you explain 0:02:43.880 --> 0:02:46.840 what they're thinking was there? Yeah, that's exactly. It's so 0:02:47.080 --> 0:02:50.760 ordinary people had to spend forty six billion pounds bailing 0:02:50.760 --> 0:02:53.960 out Royal Bank of Scotland UM, and other many other 0:02:54.000 --> 0:02:57.360 painful things too. After that, the idea was that we 0:02:57.360 --> 0:02:59.880 should never have to do that again. So one of 0:03:00.040 --> 0:03:03.120 the measures that was put in place was this ring 0:03:03.160 --> 0:03:07.800 fencing idea, so that banks, big banks should slice themselves 0:03:07.919 --> 0:03:11.800 into two parts. Um, the sort of high street lending 0:03:12.240 --> 0:03:16.239 to individuals and small businesses, medium sized businesses, That stuff 0:03:16.280 --> 0:03:19.799 goes inside the ring fence, and then the riskier, more 0:03:19.880 --> 0:03:24.600 volatile investment banking business which sits in another entity outside 0:03:24.600 --> 0:03:27.399 the ring fence, and the idea is that if that 0:03:27.520 --> 0:03:31.400 bank gets into trouble, the investment banking business can can 0:03:31.480 --> 0:03:34.320 be left, can can fail, and that's fine, the market 0:03:34.360 --> 0:03:38.480 can absorb that, but that the the safe retail deposits, 0:03:38.520 --> 0:03:41.960 small business lending part needs to be protected. It needs 0:03:41.960 --> 0:03:45.440 to be a much safer institution with its own capital, 0:03:45.560 --> 0:03:48.720 so that taxpayers don't in the future have to bail 0:03:48.720 --> 0:03:51.880 out those entities ever again. But so Cather, just to 0:03:51.920 --> 0:03:54.960 be clear at these measures, as you say, basically designed 0:03:55.200 --> 0:03:58.839 as way as to avoid another future taxpayer bailout. We're 0:03:58.880 --> 0:04:02.400 not hu mandated. There were British rules, Yes, there were 0:04:02.440 --> 0:04:05.480 British rules, and the idea was that banking makes up 0:04:05.520 --> 0:04:07.800 such a huge part of the UK economy. It was 0:04:07.840 --> 0:04:10.360 a really central part of the thinking of officials at 0:04:10.400 --> 0:04:13.160 the time that we needed to have these really really safe, 0:04:13.320 --> 0:04:16.480 robust rules. But so no other banks in Europe had 0:04:16.560 --> 0:04:19.719 to do the same. So European and US banks have 0:04:20.160 --> 0:04:23.440 versions of ring fencing. But one of the arguments put 0:04:23.480 --> 0:04:27.680 forward in this country is that our rules are particularly draconian. Right, 0:04:27.720 --> 0:04:30.880 but you know, this being built as a Brexit dividend 0:04:31.000 --> 0:04:33.840 that's not quite right. Then this is something we unilaterally 0:04:33.880 --> 0:04:36.560 introduced in the UK and therefore presumed even if we 0:04:36.560 --> 0:04:40.840 were still in the EU, EU could unilaterally remove. Yeah, 0:04:41.040 --> 0:04:44.799 that's right. This doesn't have to be a Brexit dividend. Um. 0:04:44.839 --> 0:04:48.600 And there's been thinking on tinkering around with the ring 0:04:48.640 --> 0:04:51.840 fence for quite a while. I mean weirdly. Actually, ring 0:04:51.880 --> 0:04:56.039 fencing only came in because it's so kind of complicated 0:04:56.080 --> 0:04:59.760 in cumbersome and banks spent about collectively have spent about 0:04:59.760 --> 0:05:03.640 three billion pounds making all the changes they needed to make. Um. 0:05:03.800 --> 0:05:07.360 So officially it's only been with us since. But there's 0:05:07.360 --> 0:05:10.840 a view that you know, markets change, economies change, and 0:05:10.920 --> 0:05:13.479 so they needed to be a sort of rethink about 0:05:13.520 --> 0:05:17.040 whether we still needed ring fencing. So under the sunac government, 0:05:17.080 --> 0:05:19.440 I guess ring fencing has been one of the many, 0:05:19.480 --> 0:05:22.880 many pieces of legislation under review and trying to help 0:05:22.920 --> 0:05:26.840 the bolster the financial service sector. Yes, it was. It's 0:05:26.880 --> 0:05:31.160 been reviews reviewed by SUNAC UM and someone called Keith Skiokuza, 0:05:31.680 --> 0:05:36.440 senior business figure, was commissioned to do a report. Um. 0:05:36.480 --> 0:05:40.920 He did that report and he recommended a range of things. 0:05:40.960 --> 0:05:43.760 It was quite a sort of conservative report but it 0:05:43.800 --> 0:05:47.600 did say that these smaller banks that didn't do anything 0:05:47.720 --> 0:05:52.320 risky perhaps shouldn't be subject to ring fencing rules. It's 0:05:52.360 --> 0:05:55.960 a bit of a sort of regulatory car crashes in this. 0:05:56.279 --> 0:05:58.240 I mean, two thousand and eight was the financial crisis. 0:05:58.640 --> 0:06:00.919 You know, the world nearly came to its knees in 0:06:01.040 --> 0:06:03.440 terms of the banking system, and more than it takes 0:06:03.440 --> 0:06:06.560 more than a decade to implement this rule that's supposed 0:06:06.560 --> 0:06:10.159 to protect people's savings and personal bank accounts, and just 0:06:10.240 --> 0:06:13.159 three years later they've decided it's not fit for purpose. Yes, 0:06:13.200 --> 0:06:17.320 I mean I strongly suspect they won't actually do anything 0:06:17.400 --> 0:06:21.400 particularly radical on ring fencing. I think they may tinker 0:06:21.440 --> 0:06:25.000 around with it. And the thing is if if they 0:06:25.080 --> 0:06:28.080 if they exempt the likes of TSB Virgin Money, these 0:06:28.120 --> 0:06:30.719 sort of medium sized banks in this country, that's great 0:06:30.760 --> 0:06:35.000 for them, but it really won't kind of release billions 0:06:35.000 --> 0:06:37.760 of pounds of capital into the economy because they don't 0:06:37.800 --> 0:06:40.960 really do anything that's not not ring fence business. So 0:06:40.960 --> 0:06:42.920 if they suddenly don't have a ring fence, there isn't 0:06:42.920 --> 0:06:46.080 this sort of magical benefit that will be created. I mean, 0:06:46.120 --> 0:06:51.159 it's probably a sensible measure, but I think perhaps the 0:06:51.200 --> 0:06:54.440 notion that it will kind of unleash lots and lots 0:06:54.440 --> 0:06:57.560 of capital into the economy might might not be true 0:06:57.560 --> 0:06:59.200 because we've we've got the City Minister. I've got a 0:06:59.240 --> 0:07:01.520 quote a hit from him and Drew Griffiths who said 0:07:01.560 --> 0:07:03.720 this week we can make the UK a better place 0:07:03.720 --> 0:07:05.960 to be a bank to release some of that trapped 0:07:06.000 --> 0:07:08.560 capital over time around the ring fence. But sounds like 0:07:08.600 --> 0:07:11.400 what you're saying, Katherine, and he's he's not being entirely 0:07:11.480 --> 0:07:15.280 straightforward there. Well, um, I mean that's a shocking thought 0:07:15.400 --> 0:07:18.360 for an instant not to be straightforward. Um. I mean, 0:07:18.440 --> 0:07:19.840 I think it will be really interesting to see what 0:07:19.880 --> 0:07:22.680 they are actually planning. One of the kind of sort 0:07:22.680 --> 0:07:27.080 of juicy juicy aspects to this is whether they raise 0:07:27.200 --> 0:07:29.680 the level from twenty five billion that's the level of 0:07:29.720 --> 0:07:31.320 deposits you have before you have to go into the 0:07:31.360 --> 0:07:35.680 ring fence, to say fifty or a hundred. Because if 0:07:35.680 --> 0:07:38.960 they go down that path, some of the chief beneficiaries 0:07:38.960 --> 0:07:41.960 will could well be the big American banks. So Goldman, 0:07:42.040 --> 0:07:44.840 Saxes Marcus has about twenty three billion pounds worth of 0:07:44.880 --> 0:07:48.200 deposits at the moment in the UK and Chase. The 0:07:48.240 --> 0:07:51.000 digital bank from JP Morgan has sort of just over 0:07:51.080 --> 0:07:54.800 ten at the moment, so if they tinker around with 0:07:54.880 --> 0:07:58.080 the level, then it might be those banks that have 0:07:58.320 --> 0:08:01.400 big benefits. So Big Bang two point oh, was this 0:08:01.480 --> 0:08:04.480 like Liszt Trust? Was this something under Quarte? And this 0:08:04.520 --> 0:08:07.720 goes back to hurricanes bag, to the wave of deregulation 0:08:09.160 --> 0:08:12.000 six which at the time actually really made London a 0:08:12.040 --> 0:08:14.760 financial center. But things are different now. We were not 0:08:14.840 --> 0:08:18.920 innovating like we were in six No. And actually one 0:08:18.920 --> 0:08:20.840 of the things I think it's quite interesting about back 0:08:20.880 --> 0:08:24.520 to the eighties, I was talking to a very senior 0:08:24.600 --> 0:08:27.360 person from the city, someone called Sir Nigel Boardman, who 0:08:27.400 --> 0:08:30.160 is now chairman of bus Not Bank and was a 0:08:30.240 --> 0:08:32.160 very senior lawyer at slaughter May for a long time, 0:08:32.400 --> 0:08:34.560 and he was reminding me recently that he used to 0:08:34.600 --> 0:08:40.040 sit on kind of panels back in the eighties asking 0:08:40.520 --> 0:08:43.480 which which kind of European financial center will will be 0:08:43.559 --> 0:08:46.880 the pre eminent one, just as Big Bang was happening, 0:08:46.880 --> 0:08:48.640 and he was saying that it wasn't at all clear 0:08:48.679 --> 0:08:51.560 at that point that London would in fact come out 0:08:51.760 --> 0:08:53.480 come out on top, and of course that is what 0:08:53.600 --> 0:08:57.240 happened so that was an inflection point, and you know, 0:08:57.480 --> 0:09:01.600 the optimists now think it's an inflection point now. I mean, 0:09:01.760 --> 0:09:03.880 although a lot of the stories, and we've talked about 0:09:03.920 --> 0:09:05.880 this on in the city in the last few weeks 0:09:05.880 --> 0:09:08.640 have pointed the other way, haven't they. We've seen Paris 0:09:08.720 --> 0:09:12.079 overtake London in terms of the overall market capitalization of 0:09:12.160 --> 0:09:14.400 the stock market. We've had stories this week about Golden 0:09:14.440 --> 0:09:18.240 Sacks moving jobs to Milan. Um. You know, the picture 0:09:18.640 --> 0:09:23.480 of London's dominance in Europe is pretty murky at the moment, 0:09:23.520 --> 0:09:26.800 isn't it. And the and the long term trend seems 0:09:26.840 --> 0:09:30.000 to be a drift of capital trading to other centers 0:09:30.600 --> 0:09:33.439 in the European Union. I mean, I mean this measure, 0:09:33.480 --> 0:09:37.000 which sounds like it's less impressive than perhaps on paper, 0:09:37.080 --> 0:09:39.679 isn't going to reverse that, isn't No, that's certainly not 0:09:39.720 --> 0:09:41.839 going to reverse it. I mean, what we're waiting for, 0:09:42.360 --> 0:09:46.040 very excitingly for our Christmas present is a wider a 0:09:46.120 --> 0:09:49.640 wider range of ideas from the City Minister Andrew Griffith. 0:09:49.679 --> 0:09:53.800 They're meant to be coming before Christmas, so um, you know, 0:09:53.920 --> 0:09:56.720 perhaps along with this Santa with his Santa hat on 0:09:57.240 --> 0:09:59.280 going around the city. Who's going to get a lump 0:09:59.280 --> 0:10:05.000 of coal? Um? They assume, yes, exactly there you know 0:10:05.520 --> 0:10:08.520 there will be others, um, so we may we may 0:10:08.559 --> 0:10:10.880 get some others which as and I suppose the point 0:10:11.000 --> 0:10:15.520 is perhaps that you know, cumulatively, they may well have 0:10:15.520 --> 0:10:18.240 have an effect. I mean people will say London has 0:10:18.440 --> 0:10:24.280 a huge liquid markets and lots and lots of expertise, um, 0:10:24.520 --> 0:10:26.160 the language, the times and all the rest of it. 0:10:26.160 --> 0:10:29.680 I mean, these are very substantial things. So if Griffith 0:10:29.720 --> 0:10:31.880 does in fact come up with some really sort of 0:10:32.440 --> 0:10:36.480 meaty ideas, then perhaps it will make a difference. Catherine, 0:10:36.480 --> 0:10:40.560 thank you so much. Always always under money, Katherine Griffin there, 0:10:41.040 --> 0:10:47.920 thank you. I mean, Frank, I just think it's amazing 0:10:48.000 --> 0:10:52.120 that this big bang so called the government is trumpeting. 0:10:52.160 --> 0:10:55.920 When you start looking under the herd, it's really nothing 0:10:55.920 --> 0:10:57.560 of the sort, right, And I just think, you know, 0:10:57.600 --> 0:10:59.840 what is the city going to really badly do substantially 0:11:00.240 --> 0:11:02.240 it is going to move the needle here? Yeah, maybe 0:11:02.240 --> 0:11:05.280 it's nothing of the sort they're trying. And this maybe 0:11:05.280 --> 0:11:08.480 was something different that we didn't have under the Boris government. 0:11:08.600 --> 0:11:10.719 And Dave I spoke to Nicholas Lions now he comes 0:11:10.720 --> 0:11:13.600 from a financial services background, which is a good thing 0:11:13.640 --> 0:11:15.760 for a Lord Mayor at the moment. That's right. He's 0:11:15.760 --> 0:11:18.880 somebody who's worked in the city for forty years. It's 0:11:18.920 --> 0:11:22.640 been an investment banker for more than twenty years, and 0:11:22.720 --> 0:11:24.880 the last eighteen he sat on the boards of insurance 0:11:24.920 --> 0:11:28.719 companies and asset managers and he's now taking a sabbatical 0:11:28.760 --> 0:11:31.120 for being chairman of Phoenix Group to take on this 0:11:31.240 --> 0:11:33.800 role of Lord Mayor. And his main point is really 0:11:33.840 --> 0:11:37.760 it's time to capture maybe some of the positives of Brexit. 0:11:37.840 --> 0:11:41.040 So we began by discussing how he's seen the city 0:11:41.080 --> 0:11:45.040 evolved over the past forty years. It has changed dramatically. 0:11:45.080 --> 0:11:48.200 I mean when I started, we still had stock jobbers 0:11:48.200 --> 0:11:50.680 who used to walk around the City of London and 0:11:50.720 --> 0:11:56.600 top hats. So fortunately we've moved on from that. No 0:11:56.640 --> 0:11:59.000 longer except what there's a little side street around here, 0:11:59.000 --> 0:12:03.199 actually two worktop has once in a while. Well that's true, 0:12:04.200 --> 0:12:06.600 but I think, you know, technology has made a huge difference, 0:12:06.600 --> 0:12:10.360 Globalization has made a huge difference, and we have always 0:12:10.440 --> 0:12:13.360 managed to attract the brightest and the best from around 0:12:13.400 --> 0:12:17.640 the world, and that's I think hugely to our credit 0:12:17.679 --> 0:12:20.439 and usually to our benefit, and I think that's probably 0:12:20.679 --> 0:12:24.760 the biggest change of all. Back in two it was 0:12:24.800 --> 0:12:28.480 a very sort of British city and now it's a 0:12:28.640 --> 0:12:33.000 very very multinational global city, and this is thanks to regulation. 0:12:33.160 --> 0:12:35.560 I mean, there was an attraction of capital to the 0:12:35.559 --> 0:12:37.599 city of London which was actually quite incredible in the 0:12:37.640 --> 0:12:40.960 last fourteen fifteen years, which I imagine has to do 0:12:41.000 --> 0:12:44.000 with the time zone. Time zone has been always a 0:12:45.000 --> 0:12:47.960 real help, but when we when we started looking at 0:12:47.960 --> 0:12:52.840 twenty four hour trading for international banks and asset managers, 0:12:53.320 --> 0:12:57.079 that really played to our strength sitting between New York 0:12:57.120 --> 0:12:59.520 on the one side and Asia on the other, So 0:12:59.600 --> 0:13:02.000 that I think has been a big, big benefit. But 0:13:02.080 --> 0:13:06.120 clearly changes in regulation. Big Bang was, it was a 0:13:06.160 --> 0:13:10.400 transformative thing, and now we're talking about Big Bang two 0:13:10.400 --> 0:13:13.000 point zero. But in the meantime has it declined in 0:13:13.000 --> 0:13:16.160 the last four to five years because regulation has not 0:13:16.280 --> 0:13:21.520 really maybe as nimble as other places like Amsterdam, or 0:13:21.880 --> 0:13:24.400 not been as aggressive enough as New York. I think 0:13:24.679 --> 0:13:29.880 it's absolutely fair to say that other financial centers have 0:13:30.080 --> 0:13:35.000 tried to take advantage of the uncertainty that was created 0:13:35.000 --> 0:13:39.200 by Brexit to try and build their own capabilities. But actually, 0:13:40.160 --> 0:13:43.280 you know, we we still have the same number of 0:13:43.280 --> 0:13:46.840 people employed in financial services here. We've we've still managed 0:13:46.880 --> 0:13:50.080 to increase the assets under under management here in the 0:13:50.200 --> 0:13:55.199 UK about ten trillion pounds of assets and international assets 0:13:55.240 --> 0:13:57.240 up from four point four to four point six trillion. 0:13:57.559 --> 0:14:02.480 There's never room form acency. And actually, the way I 0:14:02.520 --> 0:14:04.360 look at it is this is a wonderful wake up 0:14:04.360 --> 0:14:06.920 call for London as a global financial center as we 0:14:07.000 --> 0:14:11.880 look at technological changes that financial centers like Singapore are 0:14:11.920 --> 0:14:17.160 introducing that will that will help trigger a response from 0:14:17.200 --> 0:14:22.160 London that will be strong and and and coaching. But overall, 0:14:22.200 --> 0:14:25.520 has it has it lost something? You know since since Brexit? 0:14:25.680 --> 0:14:29.120 I don't think so, I really don't. I think, um, 0:14:29.600 --> 0:14:31.560 there are there were always going to be people in 0:14:31.640 --> 0:14:35.520 frontline jobs that because of Brexit had to relocate to 0:14:35.920 --> 0:14:41.720 other parts of Europe. But we've seen you know, small 0:14:41.840 --> 0:14:46.560 impacts in Dublin, in Luxembourg, in Paris, in Amsterdam, in Frankfort, 0:14:47.040 --> 0:14:53.040 but nothing compares to London. And you know, and London 0:14:53.160 --> 0:14:56.440 is always going to be the most powerful, the most 0:14:56.480 --> 0:14:59.600 important and most relevant global financial center in our time zone. 0:15:00.040 --> 0:15:01.920 Feel like every two weeks there's a story saying, well, 0:15:01.960 --> 0:15:05.920 after dam overtook us on the pipelines, or I p 0:15:06.040 --> 0:15:08.080 o s in the pipeline, or there was a story 0:15:08.400 --> 0:15:11.840 in terms of the how big the stock exchanges France 0:15:11.840 --> 0:15:14.120 overtook us two weeks ago. Yeah, you can. You know, 0:15:14.160 --> 0:15:20.200 you're always going to find little anecdotes to support particular theory. Um. 0:15:20.240 --> 0:15:22.560 It sort of depends which end of the of the 0:15:22.640 --> 0:15:26.800 lens you're looking through. Um. But it's not so much 0:15:26.840 --> 0:15:29.440 that London has to be the biggest at everything. The 0:15:29.480 --> 0:15:33.800 fact is what we are is an extraordinary ecosystem that's 0:15:33.840 --> 0:15:38.000 got a significant chunk of everything. And it's when you 0:15:38.080 --> 0:15:41.880 put the whole thing together. It's not just financial services, 0:15:41.960 --> 0:15:45.560 it's also traditional financial sort of fintech, which is where 0:15:45.560 --> 0:15:50.600 we're real leaders. But it's also the whole legal infrastructure. 0:15:50.920 --> 0:15:53.000 So you know, the primacy of the rule of law 0:15:53.040 --> 0:15:55.720 and our independent judiciary, the fact that contracts are written 0:15:55.760 --> 0:15:59.280 under English law. All over the world, people want disputes 0:15:59.320 --> 0:16:02.400 to be resolved oolved here in the UK because of 0:16:02.400 --> 0:16:07.360 the quality of our of our judicial system. So and 0:16:07.440 --> 0:16:13.520 we've got terrific risk management, compliance, technology management consultants, Order 0:16:13.520 --> 0:16:15.480 to the actor as you name it, it's when you 0:16:15.520 --> 0:16:19.320 look at it in the round, it's it's I'll stop 0:16:19.400 --> 0:16:22.080 short of saying it's impossible for anyone to challenge that, 0:16:22.120 --> 0:16:24.840 but it's going to take many, many, many decades of 0:16:24.880 --> 0:16:27.960 concerted effort, and frankly, I don't think that's going to happen. 0:16:28.000 --> 0:16:31.560 But the City of London with Boris Johnson as head 0:16:31.560 --> 0:16:34.200 of government is maybe different to the City of London 0:16:34.480 --> 0:16:37.120 with Prime Minister Rushi Sunac just because of the amount 0:16:37.120 --> 0:16:39.280 of attention and love it got from Boris Johnson. Is 0:16:39.320 --> 0:16:42.840 that fair? I think what I would say is that 0:16:43.400 --> 0:16:45.880 we now have in number ten and number eleven two 0:16:45.880 --> 0:16:50.800 people who really understand not just business but financial services. 0:16:51.120 --> 0:16:53.760 And that's I think very very important because we can't 0:16:53.840 --> 0:16:59.280 have a thriving national economy without an immensely strong City 0:16:59.480 --> 0:17:07.120 of London. And in purely factual terms, we know from 0:17:07.160 --> 0:17:12.760 the reaction of the bond markets to the Liz Trust 0:17:12.800 --> 0:17:18.119 qua quatting period of trust and omics as it's called, 0:17:18.480 --> 0:17:22.040 that there is a limit to the amount that you 0:17:22.119 --> 0:17:26.760 can just borrow to pay your bills. So we need 0:17:26.960 --> 0:17:30.320 growth and we need investment, and that has to come 0:17:30.359 --> 0:17:34.480 from the private sector, primarily from the private sector. Because 0:17:34.480 --> 0:17:37.800 the government doesn't have a huge resource at its disposal. 0:17:38.840 --> 0:17:43.040 There are two massive parts of capital in this country. 0:17:43.080 --> 0:17:45.560 One is in the real estate market and the other 0:17:45.640 --> 0:17:48.040 is in the pension market, and we need to mobilize 0:17:48.320 --> 0:17:50.760 pension capital. So you have an agenda of things that 0:17:50.800 --> 0:17:53.760 you want to to, if not pushed through, certainly reformed 0:17:53.760 --> 0:17:56.440 for the City of London. So there are there are 0:17:57.160 --> 0:18:00.439 three big areas that I really wanted to focus on 0:18:00.440 --> 0:18:02.520 in the course of my mayor or year and it 0:18:02.640 --> 0:18:06.320 is just I'm afraid one year. UM. One is an 0:18:06.400 --> 0:18:11.359 initiative around the global investment future. So this is a 0:18:11.600 --> 0:18:16.159 this is a scheme that Corporation works on with the 0:18:16.200 --> 0:18:19.440 Investment Association and the Department of International Trade to attract 0:18:20.040 --> 0:18:23.080 overseas capital from large asset owners to come into the 0:18:23.160 --> 0:18:25.040 UK and be managed in the UK. And we have 0:18:25.119 --> 0:18:29.360 a we have a plan by thirty to increase from 0:18:29.560 --> 0:18:32.000 ten trillion in the amount of assets that we have 0:18:32.280 --> 0:18:36.280 being managed here to twenty trillion pounds. The second area 0:18:37.440 --> 0:18:43.120 is around financial inclusion and within that sort of subset 0:18:43.119 --> 0:18:48.360 of financial literacy. Financial inclusion is a real challenge at 0:18:48.359 --> 0:18:51.080 this time with the with the cost of living crisis 0:18:51.080 --> 0:18:53.840 that we've got. We've got seventeen million people in this 0:18:53.960 --> 0:18:58.359 country with savings of less than one hundred pounds so 0:18:59.040 --> 0:19:01.480 and the only one and a half million of those 0:19:01.480 --> 0:19:04.679 who are unemployed. So over fifteen million people in this 0:19:04.760 --> 0:19:08.840 country are working in work. They're earning a wage, but 0:19:08.920 --> 0:19:12.359 they can't think beyond budget the budget for the next week. 0:19:12.600 --> 0:19:15.240 So I want to convene a meeting with a lot 0:19:15.240 --> 0:19:18.720 of the large financial service organizations, with the charities that 0:19:18.760 --> 0:19:22.520 are involved in financial inclusion and see if we can't 0:19:23.240 --> 0:19:26.679 get a really good plan of what's best practice around 0:19:26.680 --> 0:19:28.479 how we can help people. And it's easier to go 0:19:28.840 --> 0:19:31.800 that way instead of the government doing it because it's 0:19:31.800 --> 0:19:34.359 more efficient or it gets so quicker. I just think 0:19:34.440 --> 0:19:39.280 that it's the people who are who have the customer relationships. 0:19:39.440 --> 0:19:42.240 It's where the rubber meets the road. So there's a 0:19:42.320 --> 0:19:45.240 default I think to say the government should do everything. 0:19:45.359 --> 0:19:47.520 The truth of it is the government can't do everything. 0:19:48.240 --> 0:19:52.439 Um And I'm here to promote a resilient, resourceful and 0:19:52.520 --> 0:19:57.160 responsible city and therefore this is a really important area 0:19:57.200 --> 0:19:59.680 where the city can be responsible. How difficult will it 0:19:59.720 --> 0:20:04.199 be to attracts international capital to the UK given the 0:20:04.200 --> 0:20:08.640 turbulence and markets that we saw in October. When I 0:20:08.680 --> 0:20:12.080 talked to sort of sovereign wealth funds around the world 0:20:12.520 --> 0:20:15.600 and asked them to allocate more money here, and they 0:20:15.800 --> 0:20:20.640 raised this issue about sort of political turmoil. I remind 0:20:20.680 --> 0:20:22.600 them the city has been around for twice as long 0:20:22.680 --> 0:20:25.359 as we've had parliamentary democracy in this country. You know, 0:20:25.440 --> 0:20:29.560 we we have, we have survived everything that's come our way. 0:20:30.320 --> 0:20:33.280 We shouldn't lose lose sight of the fact that long 0:20:33.440 --> 0:20:36.840 term guilt yields are now down to below the levels 0:20:36.840 --> 0:20:40.480 that they were at before this trust became PM, so 0:20:41.040 --> 0:20:46.040 that the panic that there was in international markets. Bon 0:20:46.280 --> 0:20:50.080 bond investors are very sophisticated, you know, they do the maths. 0:20:50.240 --> 0:20:53.960 They look at government plans and government strategies, and the 0:20:54.000 --> 0:20:57.080 Prime Minister and the chances of the Exchequer, to be fair, 0:20:57.119 --> 0:21:01.280 have put together a really coherent plan to get us 0:21:01.280 --> 0:21:06.840 to balance the books. That has restored confidence. I don't 0:21:06.840 --> 0:21:10.920 think one should necessarily look at what happens to the 0:21:11.000 --> 0:21:14.000 pound against the dollar and come to any great conclusions, 0:21:14.000 --> 0:21:16.800 because that's more to do with what's happening in the US. 0:21:16.840 --> 0:21:20.560 I wonder how much you think Brexit contributed to a 0:21:20.640 --> 0:21:23.199 tight labor market and therefore putting pressure on a lot 0:21:23.240 --> 0:21:26.320 of wages. I don't think that there was a huge 0:21:26.359 --> 0:21:29.640 amount of support in the city for Brexit. I think 0:21:30.000 --> 0:21:34.159 the city looks always at its competitive position, and you 0:21:34.240 --> 0:21:37.879 don't want to damage your competitive position if you can 0:21:37.920 --> 0:21:40.600 avoid it. But the fact is, you know that happened 0:21:40.600 --> 0:21:43.720 in sixteen. You know, we've we've moved on. What we 0:21:43.800 --> 0:21:46.240 do need to do now is work together to make 0:21:46.240 --> 0:21:50.520 sure that we can take advantage of regulatory freedoms so 0:21:50.600 --> 0:21:52.520 that I think the problem that we have at the 0:21:52.520 --> 0:21:56.320 moment is, you know, we had the Brexit was always 0:21:56.320 --> 0:22:00.520 going to have, you know, some negatives, but we always 0:22:00.640 --> 0:22:02.520 hope that there would be some positives as well. We've 0:22:02.520 --> 0:22:06.840 taken the negatives, we haven't we haven't captured the positives yet, 0:22:06.840 --> 0:22:11.160 so we've The announcements on solvency tore at the autumn 0:22:11.160 --> 0:22:15.159 Statement were the first signs of that and very welcome. 0:22:15.200 --> 0:22:17.640 They were too. How do you just sorry? I talk 0:22:17.680 --> 0:22:19.720 often about solvency too, but we don't want to borre 0:22:19.800 --> 0:22:23.520 everyone who's listening. Although it's extremely important. What was positive 0:22:23.760 --> 0:22:26.399 in that that it didn't make you think that the 0:22:26.480 --> 0:22:30.000 chancer understood some some of the pitfalls of what the 0:22:30.000 --> 0:22:34.520 financial services are dealing with. Oh yeah, absolutely, and and 0:22:34.560 --> 0:22:37.000 again you know, to have a prime minister who worked 0:22:37.040 --> 0:22:40.359 for an American investment bank and a hedge fund means 0:22:40.400 --> 0:22:44.880 that you can have detailed conversations about technical things which 0:22:44.880 --> 0:22:49.520 are completely understood. And I would actually also take this 0:22:49.560 --> 0:22:52.280 opportunity to pay tribute to John Glenn when he was 0:22:52.320 --> 0:22:55.840 City Minister and Economic Secretary to the Treasury, who worked 0:22:55.840 --> 0:23:01.439 tirelessly in getting to know about these issues and worked 0:23:01.600 --> 0:23:06.239 very very well with the Treasury, particularly Gwyneth Nurse who 0:23:06.320 --> 0:23:09.480 is now Director General Financial Institutions in the Treasury. That 0:23:09.680 --> 0:23:11.880 they should take a huge amount of credit for where 0:23:11.920 --> 0:23:14.480 we are. And you know, and well done to Andrew 0:23:14.480 --> 0:23:18.120 Griffith for you know, grabbing the battle on running with it. 0:23:18.400 --> 0:23:20.639