Magazine article Geographical

London Calling

Magazine article Geographical

London Calling

Article excerpt

If the City of London were a country it would be ranked the 20th richest in the world. Isabelle Fremeaux digs into the history of the famous Square Mile, which she says, is fast becoming more than just a financial centre

THE FAMED `SQUARE MILE' financial district of London is a small world. The tiny, well-bounded piece of land, originally defined by Londinium's third century walls, is Like an imperceptible island in the middle of town: most Londoners know which streets are `in' and which are `out'. The architecture is a unique jumble of historical buildings amid glass and metal post-modern skyscrapers, among which, the Lloyd's building, designed by Richard Rogers, features as a masterpiece.

But above all, the City remains associated with multi-million pound deals, bankers, fast money, hectic trading floors and underage millionaires. So much so that in the Millennium Dome at Greenwich, the City is represented in the Money Zone.

Today's City, through its interbank market, is the `central banker' of the world's banking system. It is the largest foreign exchange market in the world. The money for medium-term financing such as for mergers and acquisitions, may be raised in the USA, but the structure of these complicated deals is often worked out in London. Even in long-term financing such as underwriting, the City is outranked only by New York. Yet only 40 years ago this would have been unthinkable. After 50 years of steady decline the City had become an almost irrelevant name in the financial world. Peter Druker, aged 70, who has been a financial analyst all his life, explains: "To some extent the City's turnaround was made possible by two American events in the 1960s. At the time of the Cuban missile crisis, the Russian State Bank, afraid of having its American accounts frozen, shifted its foreign reserves into London. But the Russians wanted to keep their money in dollars. And thus the Eurodollar was born -- a transnational currency denominated in dollars but domiciled in London. Shortly thereafter the American administration, rather foolishly, put a punitive tax on payments of interest to foreigners, thus destroying in one fell swoop the flourishing New York foreign-bond market. This gave birth to the Eurobond -- again denominated mostly in dollars but domiciled and controlled in London." This triggered the resurgence of the City.

Hence, last year, bonuses totalled more than 1 billion [pounds sterling] and equities alone have passed the trillion pounds mark. The average yearly salary of a financial analyst is between 200,000 [pounds sterling] and 500,000 [pounds sterling], reaching 1 million [pounds sterling] if working in one of the star agencies such as Reuters or Extel. The much talked about, but eventually aborted, merger between banking titans Deutsche and Dresdner could have been a 750 billion [pounds sterling] operation. Vertiginous figures, preceded by the [pounds sterling] sign and accumulating zeros are the trademark of the City. Be it salaries, investments or deals: the amounts of money handled in the City are never small.


But the City is changing. A businessman coming back from exile after 15 years would hardly recognise the place. Most of the jobs are different, some landmarks, such as the Stock Exchange, have been transformed, even the people don't look the same.

The typical image of the Square Mile used to consist of clean-cut men in grey suits, wearing Church's shoes and carrying briefcases, but the human landscape of the City is mutating. With the advent of `dress down' Friday extending to more and more days of the week, with the new style management promoted by the likes of Virgin's Richard Branson or Body Shop's Anita Roddick who banned the suit from their strategies, the City is losing its solemn appearance for a more casual look. "I have seen the change over the last two years," explains Marga Vidiella, an account manager in Blackfriars. …

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