HSBC’s move from Canary Wharf to St Paul’s is a big win for the City and hybrid working

Published

2 years ago

June 26, 2023

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HSBC is set to leave its home of 20 years at 8 Canada Square in Canary Wharf, and relocate to a site near St Paul’s Cathedral previously occupied by BT.

The move, first reported by The Times, is hugely significant in what it says about demand for office space – and not just in London.

HSBC’s existing headquarters in London, to which it moved in 2002, currently houses up to 8,000 employees at peak hours. The new development, Panorama St Paul’s, is roughly half the size.

That reflects the fact that HSBC does not expect as many of its employees to be working in its head office at the same time in future.

It is a clear indicator from one of the biggest employers in the UK financial services sector that hybrid working, where employees work from home for a certain number of days a week and in the office for others, is here to stay.

At odds with others

The decision also puts HSBC at odds with some of the big Wall Street banks that dominate the investment banking landscape. The likes of JPMorgan and Goldman Sachs have been strident in their calls for employees to return to the office in the post-pandemic world.

By contrast, other employers in the Square Mile and Canary Wharf have taken a more flexible approach, with the likes of Lloyds Banking Group telling staff they expect them back in the office for at least two days a week in April this year.

The insurers Aviva and Axa, the asset managers BlackRock and abrdn, and accounting and business services groups such as Deloitte, PwC and EY are all among those who have avoided ordering staff to return to the office five days a week.

Implications to commercial property and beyond

That approach – and it very much looks to be the dominant one – will have massive implications for the commercial property sector.

It potentially leaves office owners with a surplus of space – even though recent business surveys by the likes of the property services group Savills suggest that demand for office space in central London is currently running at 10% ahead of its 10-year long-term average.

With the City and West End still pretty quiet on Mondays and Fridays – albeit not as quiet as they were during the lockdown period – it will also have implications for shops, bars and restaurants.

There are also implications for the owners of Canary Wharf itself.

The development, one of the most stunning urban regeneration projects achieved anywhere in the world during the last three decades, has been seeking to pivot away from financial services, the sector with which it is most strongly associated, into fields such as life sciences and the creative industries.

It has also begun offering residential space for the first time.

All of that was happening anyway. But the company – jointly owned by the Qatari government and the Canadian investment giant Brookfield – could still have done without HSBC moving on.

Another major Canary Wharf tenant, Credit Suisse, was also looking to sub-let some of its office space even before its rescue in March by local rival UBS.

Canary Wharf’s credit rating was downgraded at the end of last month by Moody’s.

A run of wins for the City

By contrast, the City of London Corporation – which has slugged it out for decades with Canary Wharf for office tenants – will be cock-a-hoop at luring HSBC back to the Square Mile, particularly as the news comes weeks after Clifford Chance, one of the five “magic circle” law firms, announced it would be moving back to the City from the Wharf when its lease there expires in 2028.

Luring HSBC to its new development – the bank told employees today the site was its “preferred option” – will also be a coup for Orion Capital Partners, the private equity firm, which acquired BT’s old head office at 81 Newgate Street in 2019 and which has been rebuilding it since the latter moved east to Aldgate in 2021.

HSBC, whose lease on the tower expires in 2027, also reportedly considered Evargo Tower, a site being developed to the rear of Fleet Street’s River Court, the 1932 Art Deco building previously occupied by Goldman Sachs and before that, Express Newspapers, whose journalists nicknamed it the “Black Lubyanka”.

Also considered, apparently, was 175 Bishopsgate, the vast building near Liverpool Street station previously occupied by the European Bank of Reconstruction and Development (EBRD).

The opulence of that building, replete with its marble walls, led the EBRD to be nicknamed “the Glistening Bank” – a pun on the old “Listening Bank” slogan of Midland Bank, which ironically was later bought by HSBC.

To add to the irony, the EBRD has since moved to Canary Wharf.

Moving from a symbolic home

HSBC’s existing home has been symbolic to the bank for many years.

Designed by the award-winning architect Sir Norman Foster, it brought together employees from around 20 HSBC and Midland Bank sites dotted across the City of London, including the striking blue glass building at 10 Lower Thames Street and the neighbouring (and less glamorous) St Magnus House; the now-demolished Mariner House on Pepys Street near Tower Hill; Fountain House on Fenchurch Street; Watling Court on the corner of Cannon Street and Bow Lane and, most famous of all, the beautiful old Midland Bank Group headquarters at 27 Poultry, which is now a hotel and member’s club christened – in a nod to its architect Sir Edwin Lutyens – The Ned.

To that extent, the now 45-storey building was a big commitment on HSBC’s part, following its acquisition of Midland in 1992.

At its completion it was the second-biggest building in Europe – after Canary Wharf’s flagship first tower at nearby 1 Canada Square – and has continued to break records since.

When HSBC sold it in 2007, to the Spanish company Metrovacesa, it was the first building in the UK to change hands for more than £1bn.

The buyer ran into difficulty during the financial crisis and, in December 2008, HSBC bought it back – making a reported £250m profit on the original deal.

The following year, HSBC sold the building on to South Korea’s national pension service, again at a profit. The tower has been owned since 2014 by the Qatar Investment Authority.

Since then, it has also been at the heart of the perpetual debate at HSBC over whether or not to retain its global headquarters in the UK or move to Hong Kong, something it reviews on a triennial basis.

There was once a time when this seemed almost inevitable and that day may still come.

For now, though, the only move on the cards appears to be four-and-a-half miles west from Canary Wharf.

Business

AA owners line up banks to steer path towards £4.5bn exit

Published

10 hours ago

May 24, 2025

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AA owners line up banks to steer path towards £4.5bn exit

The owners of the AA, Britain’s biggest breakdown recovery service, are lining up bankers to steer a path towards a sale or stock market listing next year which could value the company at well over £4bn.

Sky News has learnt that JP Morgan and Rothschild are in pole position to be appointed to conduct a review of the AA’s strategic options following a recovery in its financial and operating performance.

The AA, which has more than 16 million customers, including 3.3 million individual members, is jointly owned by three private equity firms: Towerbrook Capital Partners, Warburg Pincus and Stonepeak.

Insiders said this weekend that any form of corporate transaction involving the AA was not imminent or likely to take place for at least 12 months.

They added that there was no fixed timetable and that a deal might not take place until after 2026.

Nevertheless, the impending appointment of advisers underlines the renewed confidence its shareholders now have in its prospects, with the business having recorded four consecutive years of customer, revenue and earnings growth.

A strategic review of the AA’s options is likely to encompass an outright sale, listing on the public markets or the disposal of a further minority stake.

Stonepeak invested £450m into the company in a combination of common and preferred equity, in a transaction which completed in July last year.

That deal was undertaken at an enterprise valuation – comprising the AA’s equity and debt – of approximately £4bn, the shareholders said at the time.

Given the company’s growth and the valuation at which Stonepeak invested, any future transaction would be unlikely to take place with a price of less than £4.5bn, according to bankers.

The AA, which has a large insurance division as well as its roadside recovery operations, remains weighed down by a substantial – albeit declining – debt burden.

Its most recent set of financial results disclosed that it had £1.9bn of net debt, which it is gradually paying down as profitability improves.

AA owners over the years

The company has been through a succession of owners during the last 25 years.

In 1999, it was bought by Centrica, the owner of British Gas, for £1.1bn.

It was then sold five years later to CVC Capital Partners and Permira, two buyout firms, for £1.75bn, and sat under the corporate umbrella Acromas alongside Saga for a decade.

The AA listed on the London Stock Exchange in 2014, but its shares endured a miserable run, being taken private nearly seven years later at little more than 15% of its value on flotation.

Under the ownership of Towerbrook and Warburg Pincus, the company embarked on a long-term transformation plan, recruiting a new leadership team in the form of chairman Rick Haythornthwaite – who also chairs NatWest Group – and chief executive Jakob Pfaudler.

For many years, the AA styled itself as “Britain’s fourth emergency service”, competing with fierce rival the RAC for market share in the breakdown recovery sector.

Founded in 1905 by a quartet of driving enthusiasts, the AA passed 100,000 members in 1934, before reaching the one million mark in 1950.

Last year, it attended 3.5 million breakdowns on Britain’s roads, with 2,700 patrols wearing its uniform.

The company also operates the largest driving school business in the UK under the AA and BSM brands.

In the past, it has explored a sale of its insurance arm, which also has millions of customers, at various points but is not actively doing so now.

By recruiting a third major shareholder last, the AA mirrored a deal struck in 2021 by the RAC.

The RAC’s then owners – CVC Capital Partners and the Singaporean state fund GIC – brought the technology-focused private equity firm, Silver Lake, in as another major investor.

A spokesman for the AA declined to comment on Saturday.

Business

US-EU trade war fears reignite as Europe strikes back at Trump’s threat

Published

17 hours ago

May 24, 2025

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US-EU trade war fears reignite as Europe strikes back at Trump's threat

Fears of a US-EU trade war have been reignited after Europe refused to back down in the face of fresh threats from Donald Trump.

The word tariff has dominated much of the US president’s second term, and he has repeatedly and freely threatened countries with them.

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This included the so-called “liberation day” last month, where he unleashed tariffs on many of his trade partners.

On Friday, after a period of relative calm which has included striking a deal with the UK, he threatened to impose a 50% tariff on the EU after claiming trade talks with Brussels were “going nowhere”.

The US president has repeatedly taken issue with the EU, going as far as to claim it was created to rip the US off.

However, in the face of the latest hostile rhetoric from Mr Trump’s social media account, the European Commission – which oversees trade for the 27-country bloc – has refused to back down.

EU trade chief Maros Sefcovic said: “EU-US trade is unmatched and must be guided by mutual respect, not threats.

“We stand ready to defend our interests.”

Fellow EU leaders and ministers have also held the line after Mr Trump’s comments.

Polish deputy economy minister Michal Baranowski said the tariffs appeared to be a negotiating ploy, with Dutch deputy prime minister Dick Schoof said tariffs “can go up and down”.

French trade minister Laurent Saint-Martin said the latest threats did nothing to help trade talks.

He stressed “de-escalation” was one of the EU’s main aims but warned: “We are ready to respond.”

Mr Sefcovic spoke with US trade representative Jamieson Greer and commerce secretary Howard Lutnick after Mr Trump’s comments.

Mr Trump has previously backed down on a tit-for-tat trade war with China, which saw tariffs soar above 100%.

Sticking points

Talks between the US and EU have stumbled.

In the past week, Washington sent a list of demands to Brussels – including adopting US food safety standards and removing national digital services taxes, people familiar with the talks told Reuters news agency.

In response, the EU reportedly offered a mutually beneficial deal that could include the bloc potentially buying more liquefied natural gas and soybeans from the US, as well as cooperation on issues such as steel overcapacity, which both sides blame on China.

Stocks tumble as Trump grumbles

Major stock indices tumbled after Mr Trump’s comments, which came as he also threatened to slap US tech giant Apple with a 25% tariff.

The president is adamant that he wants the company’s iPhones to be built in America.

The vast majority of its phones are made in China, and the company has also shifted some production to India.

Shares of Apple ended 3% lower and the dollar sank 1% versus the Japanese yen and the euro rose 0.8% against the dollar.

Business

British taxpayers’ £10.2bn loss on bailout of RBS

Published

24 hours ago

May 23, 2025

admin

British taxpayers' £10.2bn loss on bailout of RBS

British taxpayers are set to swallow a loss of just over £10bn on the 2008 rescue of Royal Bank of Scotland (RBS) as the government prepares to confirm that it has offloaded its last-remaining shares in the lender as soon as next week.

Sky News can reveal the ultimate cost to the UK of saving RBS – now NatWest Group – from insolvency is expected to come in at about £10.2bn once the proceeds of share sales, dividends and fees associated with the stake are aggregated.

The final bill will draw a line under one of the most notorious bank bailouts ever orchestrated, and comes nearly 17 years after the then chancellor, Lord Darling, conducted what RBS’s boss at the time, Fred Goodwin, labelled “a drive-by shooting”.

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Insiders believe a statement confirming the final shares have been sold could come in the latter part of next week, although there is a chance that timetable could be extended by a number of days.

The chancellor, Rachel Reeves, is likely to make a statement about the milestone, although insiders say the Treasury and the bank are keen to simply mark the occasion by thanking British taxpayers for their protracted support.

A stock exchange filing disclosing that taxpayers’ stake had fallen below 1% was made last week, down from over 80% in the years after the £45.5bn bailout.

The stake now stands at 0.26%, meaning the final shares could be offloaded as early as the middle of next week, depending upon demand.

Total proceeds from a government trading plan launched in 2021 to drip-feed NatWest stock into the market have so far reached £12.8bn.

Based on the bank’s current share price, the remaining shares should fetch in the region of £400m, taking the figure to £13.2bn.

In addition, institutional share sales and direct buybacks by NatWest of government-held stock have yielded a further £11.5bn.

Dividend payments to the Treasury during its ownership have totalled £4.9bn, while fees and other payments have generated another £5.6bn.

In aggregate, that means total proceeds from NatWest since 2008 are expected to hit £35.3bn.

Under Rick Haythornthwaite and Paul Thwaite, now the bank’s chairman and chief executive respectively, NatWest is now focused on driving growth across its business.

It recently tabled an £11bn bid to buy Santander UK, according to the Financial Times, although no talks are ongoing.

Mr Thwaite replaced Dame Alison Rose, who left amid the crisis sparked by the debanking scandal involving Nigel Farage, the Reform UK leader.

Sky News recently revealed that the bank and Mr Farage had reached an undisclosed settlement.

During the first five years of NatWest’s period in majority state ownership, the bank was run by Sir Stephen Hester, now the chairman of easyJet.

Sir Stephen stepped down amid tensions with the then chancellor, George Osborne, about how RBS – as it then was – should be run.

Lloyds Banking Group was also in partial state ownership for years, although taxpayers reaped a net gain of about £900m from that period.

Other lenders nationalised during the crisis included Bradford & Bingley, the bulk of which was sold to Santander UK, and Northern Rock, part of which was sold to Virgin Money – which in turn has been acquired by Nationwide.

NatWest declined to comment on Friday.

A Treasury spokesperson said: “We now own less than 1% of shares in NatWest which is a significant step towards returning the bank to private ownership and delivering value for money for taxpayers.

“We are on track to exit the shareholding soon, subject to sales achieving value for money and market conditions.”