Lots of banks run their emerging markets businesses out of London. That could change.
On one hand, London’s role as a centre of financing for emerging markets firms is looking secure. When Lehman Brothers executed a dawn raid on the stock of Australia-based Rio Tinto last month on behalf of Chinese client Chinalco, the coup was managed out of London, according to the
Similarly, The Independent reports that rival Russian oligarchs have hired a raft of British bankers to assist with their bids for Russia’s Norilsk Nickel.
“When it comes to capital raising, London is the major location for emerging markets companies,” says Ian Gomes, chairman of the new and emerging markets practice at KPMG. “It’s a major centre for oil financing and understands mining and metals better than many other markets in the world.”
On the other hand, with countries like China and India pushing their own markets as sources of funding, and with both Barclays Capital and JPMorgan scrambling to massively increase their presence in Asia, Gomes says London’s position isn’t quite what it was: “It’s a wait and see situation, but many emerging markets IPOs get better valuations if they take place in their home country.”
An exodus of emerging markets business and emerging markets bankers isn’t about to happen, but recruiters say the potential for a slow trickle of business away from London is a concern, and that bankers are starting to sweat about it.
“A few emerging markets people have lost their jobs and others are starting to look around nervously,” says Rupert Fordham, chairman of search firm Morgan Hunt.
He adds: “There’s been huge emerging markets hiring in London over the past few years, but right now there’s very little net activity going on and there’s a lot of redeployment to places like Dubai. People are starting to wonder whether they should move overseas.”
In the meantime, banks like Nomura and BNP Paribas still run their emerging markets businesses out of London. And Elvira Moratova of search firm Napier Scott says others favour a structure of co-heads, with one based in the City and the other on the ground in the local market.
The good news is that Moratova, an emerging markets specialist, also claims to be busy: “There’s still a lot of demand for emerging markets people in London this year. We are overloaded with work.”