Will Canary Wharf become a financial ghost town?

In today’s newsletter:

• The great Canary Wharf migration

• Western banks’ Syngenta dilemma

• Italy’s luxury brands grapple with succession

Dealmakers ditch Canary Wharf

The demise of London as a global financial centre may be grossly overstated. But the same may not be true of London’s iconic business district, Canary Wharf.

On Monday, HSBC became the latest big tenant to announce plans to leave the east-end Docklands. The British bank told staff that it expected to move to the former office of telecoms group BT — near the FT’s headquarters — in the City of London in late 2026.

The exodus highlights a growing desire among the financial and professional services community to leave the Wharf. Several other banks, including Barclays, Citigroup and Société Générale, have been consolidating their operations in Canary Wharf, closing ancillary offices and subletting floors.

That could spell trouble for its owners, Canadian investment giant Brookfield and sovereign wealth fund Qatar Investment Authority, which bought the site’s landlord Canary Wharf Group in a £2.6bn deal in 2015.

At the end of last year, just over half of the Wharf’s tenants were financial institutions, including JPMorgan Chase, Morgan Stanley and Credit Suisse.

That has come back to bite developers of the site as Brexit and a post-pandemic dealmaking drought have contributed to a growing appetite for downsizing. Canary Wharf has underperformed on revenue per available metre metrics since the pandemic, Lex notes, adding that trend is expected to continue.

The area, which has been synonymous with Britain’s financial sector since Margaret Thatcher’s 1986 Big Bang financial reforms, is now scrambling to diversify. Canary Wharf Group said in its annual report that it was taking steps “wherever possible . . . to mitigate or avoid material consequences from this concentration”.

This approach is likely to be prudent, as much of the legal community has already moved on to greener pastures.

US law firm Skadden Arps, a multi-decade tenant in the area, relocated to Bishopsgate in the City of London earlier this year. By moving there, it joined many of its peers including Allen & Overy, which left Canary Wharf in 2010. Clifford Chance, a UK magic circle firm, has announced it will be leaving the Docklands after its lease expires in 2028.

Taking their place in the shadow of the skyscrapers are residential units and what promises to be “Europe’s biggest life sciences campus”. This shift has already begun. There are also plans to develop an affordable housing scheme.

Brookfield and QIA are hoping that’ll be enough to make good on their investment.

A ‘question mark’ for US banks on a $9bn Shanghai IPO

For Goldman Sachs, JPMorgan and other western groups that spent years building up often-unprofitable investment banking units in mainland China, the upcoming Shanghai initial public offering of Syngenta should be a dream come true.

At $9bn, it could be one of China’s largest listings. More importantly, Syngenta, a Swiss-based producer of seeds and pesticides that operates in more than 90 countries, is one of the most international companies ever to list in China and has longstanding relationships with global banks.

On its surface, it’s the perfect justification for their presence on the mainland. So it is no surprise that bankers at Goldman, JPMorgan, Morgan Stanley, UBS and HSBC — all of which have mainland investment banking businesses — have been lobbying for roles on the listing, according to multiple people with knowledge of the matter.

But even if they win roles, they might not be able to carry out the work. State-owned ChemChina, Syngenta’s owner for the past six years, is on a US government watchlist of companies with close ties to China’s military.

The banks are asking lawyers and political consultants if they can or should be part of the listing, yet most have no clear answer.

That leaves the Asia-based bankers in a tough spot. “We do want to be a part” of the IPO, one told DD’s Kaye Wiggins. But “we always have the question mark — are we able to eventually work on this or not?”

It comes at a time when some Asia-based bankers at western companies are questioning why they bother having mainland operations as geopolitical tensions rise and US banks, in particular, are being frozen out of Chinese listings.

For now, the bankers seem to be in limbo. “Do we pitch it 100 per cent all in, or to 80 per cent of [our ability]?” one said. “You probably wouldn’t be all in.”

The next trend in Italian luxury: consolidation

Italy’s fashion houses are known for a few things, including expert craftsmanship and the visionary founders who still hold court over their kingdoms.

But not even the industry’s most domineering personalities can withstand the test of time.

The country’s luxury brands are facing a succession crisis, the FT’s Silvia Sciorilli Borrelli reports, as a lack of domestic investment makes them ripe for foreign takeovers.

French conglomerates have been making their way into Italy ever since Gucci narrowly dodged being wolfed up by LVMH in the late nineties. But its cashmere-clad billionaire founder Bernard Arnault is still on the hunt and private equity firms are also circling.

Some brands have managed to stave off takeovers. Hong Kong-listed Prada, which announced this year that scion Lorenzo Bertelli is next in line, is still clinging to its empire in the shadow of swelling conglomerates LVMH and Gucci owner Kering. Privately owned Armani and Dolce & Gabbana are also holding tight.

One solution, according to UBS’s Italy head Riccardo Mulone, is “consolidating cleverly” rather than trying to compete directly with French giants.

Prada is often floated as the group that might lead a domestic consolidation effort as it is one of the largest in market capitalisation that has evaded being bought up.

But the prospect is a long way off. As Bertelli told an FT conference last month: “Let’s see what is left to buy when the time comes.”

Job moves

• Goldman Sachs plans to nominate Tom Montag, a former partner at the Wall Street group’s trading division and until recently a top executive at Bank of America, to its board of directors.

• PwC has appointed senior partner Kevin Burrowes to lead its scandal-hit Australian operation. He replaces Kristin Stubbins, who stepped in as interim chief executive following Tom Seymour’s departure in May.

• Jefferies Financial Group has hired Barclays executive Sven Baumann as head of investment banking for Germany, Austria and Switzerland, per Bloomberg. He will be based in Frankfurt.

• National Grid has hired Shell’s former head of mergers and acquisitions Katie Jackson as president of its low-carbon and renewables ventures business.

• Bridgewater has named former Nuveen Advisory Services president Margo Cook as co-chair of its board. She has served on the hedge fund’s board since 2021.

• KPMG is cutting 5 per cent of its workforce in the US.

• Gerson Lehrman Group has become the latest due diligence group to cut jobs in China.

Smart reads

Backstopping billionaires The US government rescue of Silicon Valley Bank helped save thousands of small tech start-ups. But it also covered deep-pocketed groups that weren’t at serious risk, Bloomberg reports.

Royal flop Prince Harry and Meghan Markle’s second act as a Hollywood power couple has veered off script, The Wall Street Journal reports.

SBF’s super-agent Hollywood dealmaker Michael Kives received hundreds of millions in investments from FTX founder Sam Bankman-Fried in exchange for connecting him to A-list celebrities, The New York Times reports.

Hideously rich The Wall Street Journal chronicles how Hoka ugly sneakers became a multi-billion-dollar sensation.

News round-up

Businessman James Crown killed in racetrack accident in Colorado at age 70 (Bloomberg)

Agnelli-backed fund increases Ocado stake (FT)

Japan steps into chip supply chain with $6.4bn JSR deal (FT)

Elite law firms flock to dealmaking Saudi Arabia amid global M&A drought (FT)

Fenway Sports Group to join Tiger Woods-backed virtual golf league (FT)

Ryan Reynolds and RedBird Capital to invest in Alpine F1 team (FT)

IBM will buy Software company Apptio for $4.6bn (Bloomberg)

Prologis to buy industrial properties from Blackstone for $3.1bn (Reuters)

Gucci owner to buy perfume maker Creed (Wall Street Journal)

Ares/PacWest: Barclays is strange bedfellow in £2.3bn loan deal (Lex)