Britain should focus on growing its asset management industry and ignore what is "mostly noise" over a lack of new company listings, the ceremonial head of London's City financial district said on Thursday.
Doubts about London's future as a global financial centre surfaced after Britain left the European Union in 2020, largely cutting itself off from a major customer.
The decision of chip designer Arm Holdings, viewed as a British success story, to list in New York rather than London last September added to the angst, becoming a catalyst for easing rules.
But Lord Mayor Michael Mainelli said the City is thriving, with the number of people working in the district known as the Square Mile rising from about 525,000 pre-Brexit to 615,000, with just over 200,000 directly in financial services.
Britain has set out its "Edinburgh Reforms" to attract more international investors and listings, and the "Mansion House Compact" to persuade 10 pension funds to invest in unlisted growth companies to build up a pipeline of initial public offerings (IPOs), rather than rely on safer government bonds for returns.
Mainelli, three-months into his one-year term, dismissed concern about the London Stock Exchange's ability to compete with the New York Stock Exchange and Nasdaq as "mostly noise".
"I don't think the LSE is in particular trouble versus anyone else. If you strip the five large tech firms out, the U.S. stock exchanges aren't doing that well," he told Reuters.
His preferred benchmark for the City's financial health is the rise in its assets under management to 15% from 12% of the global total over the last eight years.
"The idea that we could get up to maybe 25%, I think is realistic over coming years," he said, adding that political stability and regulatory predictability would encourage this.
"The biggest thing is to kind of leave it alone. It's functioning well. We need to make sure the sovereign wealth funds feel comfortable here, and can have discussions that are all kind of in a day's work."
MANSION HOUSE COMPACT
A simpler tax system and being able to hire the best people were also helpful, Mainelli said.
"If we don't have the talent, we're dead. We do have requirements now that didn't exist pre-Brexit," he said.
He wants to build on the Mansion House Compact, named after his official residence where he spoke to Reuters. It has commitments from pension funds to invest up to 5% of their cash in growth companies by 2030 to obtain better returns for savers.
Mainelli said he plans to instal a "measurement programme" by July, a year since the compact was launched, to track progress on an aggregate level.
He and others, including his predecessor Nicholas Lyons who spearheaded the compact, were looking at whether the pension funds could provide loans to small growth companies via the banking sector.
Fees, set at a level to reflect challenges from investing in riskier assets - hopefully for bigger returns - were also under consideration to help unlock pension cash, he said.
Europe, like Britain has to rely mostly on private funds for big investments, and the compact has attracted the attention of euro zone finance ministers, who say something similar could deepen the bloc's capital market that faces competition from London as well as New York.
"Everybody gets it," Mainelli said.
