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Friday, 14 September, 2001, 13:36 GMT 14:36 UK
Financial ties across the waters
City of London skyline
There is good reason why financiers gather in centres, such as the City
By BBC business reporter, Rodney Smith.

Stockbrokers and bankers rarely phone one another for chummy chats unless they have a lucrative purpose.

Business is everything. Casual chat is for receptionists and other lesser folk.

It is no accident that bankers and brokers congregate within financial centres: the City of London, Wall Street, Bay Street in Toronto, Marounouchi in Tokyo.

They need to be close to one another for easy access to the meeting places of their trade, such as stock exchanges, futures markets, big banks and so on.

But loyalty can be rare. Workers can have great difficulty remembering where former colleagues have gone.

Closing ranks

Financial workers do close ranks against one other group - outsiders. (Unless the strangers are clients.)

London based stockbrokers
Traders' phone calls are rarely for chummy chats

However members of one financial community have no difficulty communicating with members from another.

This is particularly the case between London and New York, where for all the national cultural differences that both sides like to emphasise, professionally, financiers speak the same language.

They understand the nuances of one anothers' rules, many of their skills are interchangeable.

Modern investment bank staff complements are no longer as nationally biased as they once were.

As banks and their markets grow global, so do their employees, the financial community is global too.

Old alliance

Trading ties between Britain and the US, the so-called Anglo-Saxon brand of investment professionals - tough, ruthless, gimlet-eyed in pursuit of shareholder value -, have traditionally been strong thanks to common history and language.

Some of the oldest British banks in the United Kingdom have long ties with the US.

The best known example was the once proud and powerful London merchant bank Morgan Grenfell.

Contradicting the more usual westwards movements of great banks and great banking families - Barings and Warburg from Germany, Rothschild from Germany via France - JP Morgan owed its existence to an eastward migration.

It was formed by legendary American banker John Pierpoint Morgan.

His banking career started in London where he was an agent for his father's company, Drexel Morgan, which he subsequently turned into JP Morgan.

The bank is now part of the biggest in the world - JP Morgan Chase.

John Morgan was a remarkable man.

He was credited with saving the US economy at the end of the century before last when his bank organised a bond issue to back an increase in US gold reserves - thus stabilising the American economy after the panic of 1893.

Joining forces

British banks have for years enjoyed snapping up powerful regional American banks.

Last year, London-based HSBC - the second biggest bank in the world - bought Republic Bank of New York.

But powerful US stockbrokers have bought most of the best old names in British merchant banking (investment banking) and stock broking.

There are rivalries between London and New York.

New York's Nymex exchange is even now trying to steal London's biggest oil contract because the London Petroleum Exchange is abandoning open-outcry trading in favour of screen-based trading.

The New York insurance market's enthusiasm to take business from London's world leader, the Lloyd's of London market, is legendary - and sometimes acrimonious.

But the US and UK financial communities grew closer still after London's "Big Bang" in 1987.

London's traditional two-tier system - consisting of market-making 'jobbers' and executioner stockbrokers - was abandoned in favour of a single function, New York-style system.

At the same time there was an increase in the number of US firms listing in London, and British companies seeking access to the US capital markets.

Such are the reasons why a great many Britons - besides French, German, Australian, Japanese and nationals from states around the world - will be among those on the casualty list when the rubble is cleared at the World Trade Center.

See also:

14 Sep 01 | Business
Wall Street mourns lost colleagues
14 Sep 01 | Business
US markets to re-open on Monday
13 Sep 01 | Business
Disaster planning saves Wall Street
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