JP Morgan UK future at risk
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Link to Sunday Telegraph article --
JP Morgan has raised serious concerns about its commitment to its new £1.5bn European headquarters at Canary Wharf because of anger within the bank at the lack of support for the financial sector in the UK.
Jamie Dimon, chief executive of the American bank, is understood to have doubts about investing so heavily in London when there is uncertainty about future costs that could be imposed on banks. Some sources said the bank was "on the verge" of quitting the development.
Any move by JP Morgan to scrap the twin skyscraper project in the Docklands would be a major blow for the UK and George Osborne's claims that Britain is "open for business".
High-level talks are understood to have taken place between JP Morgan, officials from the Mayor of London's office and Canary Wharf Group (CWG) over the future of the headquarters, although no decision has been reached.
Boris Johnson, the London Mayor, has met representatives of JP Morgan and has been told of their concerns about the future of London as a financial centre.
The bank has made it clear that it now sees expansion being in Asia rather than in London.
It has also been made clear to Mr Johnson that as the decision on building a new headquarters in Canary Wharf is one "for the next 20 years" it is now at serious risk, said one person with knowledge of the discussions.. "They are finding that decision very difficult in the present climate because of concerns about what is ahead."
JP Morgan has listed a number of factors in their decision to review building a new headquarters in London. The atmosphere of "banker bashing" from politicians that is still apparent even after the election, new plans for an "activity tax" on banking operations in the UK, the new levy on balance sheets, the ending of tax relief on pensions for higher rate earners and the 50pc higher rate income tax have all been raised.
Mr Dimon is understood to have warned Alistair Darling, the previous chancellor, in a phone call last year that the bank could scrap the plans for its headquarters. His mood does not appear to have been improved by a change in government, and last Thursday JP Morgan revealed it had paid £328m to the Treasury for the one-off UK bonus tax.
When the bank paid CWG £237m in November 2008 for the headquarters' site, it was perceived as a major vote of confidence in the UK, with space for 20,000 staff in the proposed new building.
JP Morgan must decide on the future of the Lord Rogers-designed project by the end of 2010 and will have to pay CWG, the construction manager, £76m if it pulls out for work already completed.
Sources in the property industry insisted talks were continuing with JP Morgan over the project but that there was "a lot of work to go", with discussions at a sensitive stage and a decision unlikely until later in the year.
Rather than scrap the project, JP Morgan could downsize it to 1.6m sq ft. At present, the bank operates from offices across central London and one of the reasons for the new headquarters was to consolidate its premises, including the newly acquired Cazenove, under one roof. It could therefore look at other, smaller sites in central London for a headquarters, such as Hammerson's proposed development at St Alphage in the City, Great Portland Estates' 100 Bishopsgate, or the former 1.1m sq ft Lehman Brothers building at Canary Wharf.
All parties declined to comment last night.
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I'd expect JPM to decline quite a bit on Monday. This is a blow to the UK banking sector if the project doesn't go ahead.
