Macron is no threat to City
THE election of a former investment banker as President of France might appear to be just the fillip that Paris needs as it battles, along with Frankfurt, to try to usurp the City as Europe’s financial centre.
But in much the same way as Donald Trump is being watched like a hawk by the American media for conflicts of interest when it comes to his property and leisure empire, so the French media and public are likely to look with disfavour on a national President, who promised more Europe and structural economic reforms, who chose to make the possibility of a few thousand banking jobs a serious priority.
That is not to say that Emmanuel Macron could not make life more difficult for the City. The most obvious thing he could do is bring down the top tax rates which sent so many Parisians scampering to London after President Hollande took office.
Barriers to France winning 20,000 jobs from London, as lobby group Paris Europlace suggests, look formidable. France’s restrictive labour laws, ranging from 35-hour weeks together with the difficulty of shedding unwanted staff, will need upturning. One of the features of investment banking is the brutal way in which staff are turned out of office each time there is an economic downturn. Moreover, the European Union has made itself unattractive to banks with its curbs on bonuses (never more than twice annual salaries) and other steps aimed at hosing down Anglo-Saxon capitalism. These have had the reverse effect of giving advantage to London, New York and Asian financial centres. The only financial firm so far to commit moving staff to Paris is British bank HSBC, which already has a substantial banking operation in France. It wants to accommodate some of its Continental staff concerned about visa requirements for working in London post-Brexit.
In many ways Frankfurt is a more realistic choice and several American banks have signalled that small outposts will be set up as a contingency plan. But the numbers involved are in the hundreds or low thousands at most. Should the UK get itself a reasonable deal for financial services, the shift likely will be minimal.
The threat must be taken seriously. It is why London’s financial regulation has to be gold standard. But as a senior UK monetary official recently pointed out, in the end no Continental government has shown a willingness to take responsibility for the kind of risk that comes with being the world’s biggest foreign exchange market and clearing centre. The value of financial assets in the City is four times that of Britain’s gross domestic product and there is an implicit guarantee from Downing Street to stand behind the risk.
President Macron can make a bigger difference by shaking up France’s labour, energy and other product markets and ending high youth unemployment. Reshaping the financial system in a deeply divided society can hardly be regarded as a priority.
Hue and cry
AKZO Nobel continues to take the heat from dissident shareholders led by Elliott Partners over its refusal to fully engage with predator PPG over its latest offer of £22.3bn for the Dulux paint group. But while PPG whinges about having crossed the Atlantic for a peremptory 90-minute meeting at the weekend, another voice was being heard. Brazilian backed buyout group Heinz Kraft let it be known that after the failure of its £110bn takeover approach for Unilever, it was done with hostile takeovers.
If the objective of takeovers is to get the target companies to use their capital more efficiently, then PPG and the activist investors could achieve their wish much more quickly through the internal organisation put in place by Akzo chief executive Ton Buchner. There will be a £850m distribution to Akzo shareholders by the end of the year and a much bigger payout once speciality chemicals have been spun-off.
Meanwhile, the PPG offer could be bogged down by competition investigations across the globe for up to a year. PPG’s promise of future cash doesn’t make a lot of sense.
Echo chamber
THE willingness of Amazon to keep on investing in new ventures seems to be paying off.
Its Amazon Echo and Echo Dot voicecontrolled assistants, which help users play music, call an Uber cab or turn on the lights, are selling like hot cakes, grabbing 70.6pc of the US market.
Voice recognition system Alexa looks as if it could become the Windows for speech.
Eat your heart out, Google Home.