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The UK has always had a difficult relationship with its closest neighbour – France. In the last century, there were plenty of Brits who resisted the idea of linking the south of England with the north of the continent by train. And let’s not even get started on the whole European Union thing. But could a slew of French bankers be heading north through the tunnel in the near future? Socialist presidential candidate Francois Hollande, leading in the polls, has promised to crack down on what he perceives as the excesses of the French banking sector. Embattled president Nicolas Sarkozy has responded by saying he’ll bring in a transaction tax in France, whether the rest of Europe adopts it or not.
Never one to miss the opportunity for a soundbite, London mayor Boris Johnson piled in with an open invitation to French bankers to come to the UK capital to do their business.
Of course banks such as BNP Paribas and Société Générale have substantial investment banking operations in London already.
But could this be a masterstroke by Sarkozy, who claimed a victory over prime minister David Cameron when he ‘forced’ him into using the UK’s veto over a new EU treaty at the end of last year?
Plenty of bankers believe the French banks will ultimately have to be bailed out by their government in the form of a Tarp-style injection. But if the French banks moved their domicile to the London, wouldn’t this put the UK government on the hook instead?
At least Her Majesty the Queen would not have to strip any failed French bank chief executives of their titles.