IT’S Monday and, having just returned to the Square Mile after leading a City delegation to the US, I now have to prepare to leave London again on Saturday for the first of two visits to the Gulf.
The close proximity of these business visits throws up some major contrasts between these two markets.
In many ways, the Gulf and US could not be more different. And yet the UK has the expertise and products needed to help both regions overcome the current economic difficulties they are currently facing.
Of course, the UK has its own problems but financial centres are not in a zero sum game and we can all be stronger if we work together to overcome our respective challenges.
Take Islamic finance. The UK today is the leading western country offering Islamic products – with $19bn in assets – and the leading market outside the Muslim world. London is the western hub as far as capital markets in the Gulf States are concerned and the London Stock Exchange raised $11bn via sukuk – or Islamic bond – offerings to the end of 2009.
As my last week spent in the US made clear, London is well positioned to act as a conduit for largely untapped liquidity in the Gulf that could benefit those firms hungry for capital on the other side of the Atlantic, especially in gas and oil.
With business funding in short supply in a post-credit crunch world, the petrodollars of Islamic finance – worth over $1 trillion worldwide – are needed to complement, if not replace, existing pools of capital.
This financing method is a welcome addition to the range of products and services that the City can offer to international investors. Furthermore, these are all backed by a trusted legal framework and concentration of expertise when it comes to specialist professional services.
The current crisis has shown how interconnected financial centres have become and therefore we – both policy makers and practitioners – need to adopt a global perspective in order to rebuild the industry’s reputation.
As City workers, we know that this recent financial crisis has led to a breakdown in trust between parts of the City and wider society.
At the Guildhall dinner for International Bankers tonight I will speak about the need to restore that trust and re-establish a workable social contract between citizens and the City.
Nick Anstee is Lord Mayor of the City of London.