JP Morgan in Canary Wharf HQ move

The financial crisis has affected Canary Wharf residents

JP Morgan is to move its European head office to London's Canary Wharf from the City of London.

The bank has paid Canary Wharf Group (CWG) £237m ($350.9m) for a plot of land on the estate, CWG's majority owner Songbird Estates said.

The building, at a development called Riverside South, is expected to be be finished in four to five years time.

This year, JP Morgan has spent billions of dollars buying fellow banks Bear Stearns and Washington Mutual.

The site for JP Morgan's new European HQ is close to the offices of fellow banks Credit Suisse and Morgan Stanley.

CWG, which has already started infrastructure work, has been asked to develop the building, which could provide up to 1.9 million square feet of space

The move is good news for the Canary Wharf business district, which has been rocked by the bankruptcy of Lehman Brothers and by Bank of America's purchase of Merrill Lynch.

However, the district is almost fully let even after the failure of Lehman this autumn, helped by the rents that are on average 20% cheaper than in the City.

"In the long-term, rents in Canary are a bit lower, but the main issue is deliverability," said Dan Bayley, head of UK office agency at broker Atisreal. "Once you are over 500,000 square feet in the City, there are far more planning hurdles to delivering a big building."