‘And just who is ICAP?’ I hear you saying! Well just as a preliminary here’s the answer in brief, It’s huge!
ICAP plc is a UK based inter-dealer money broker, the largest in the world, carrying out transactions for financial institutions rather than private individuals. ICAP plc is headquartered in London, England, UK and operates from London, New York (Jersey City) and Tokyo with offices in a further 21 smaller financial centers such as Madrid and Sydney. The average daily transaction volume for ICAP plc exceeds $2.3 trillion, more than 40% of which is electronic. ICAP is an abbreviation for Intercapital, a name by which the business was previously known. (Wikipedia)
This would be an incalculable loss to Britain and to The City of London.
Other companies considering relocation include Diageo (Guinness, Smirnoff, Baileys, Bells, Johnnie Walker, Gordons gin etc - to the crack of doom!) and Astra Zeneca (no 2 pharmaceutical company) . A whole range of financial service companies have already shifted in full or partly abroad.
WHAT WILL THE REST OF US LIVE ON?
Christina
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SUNDAY TELEGRAPH 6.12.09
Icap's Michael Spencer may vote with his feet
City grandee is dropping hints that he will move his business abroad if Labour wins the election.
By Andrew Cave
Whatever happened to the Michael Spencer who would never talk about politics? For years, the founder and chief executive of inter-dealer broker Icap and Conservative Party treasurer refused to discuss the subject publicly.
But last week Mr Spencer, 54, let rip, proclaiming his hopes that a Tory government will deliver a corporation tax cut even bigger than has been promised and axe the 50p top rate of income tax.
Then he made a speech saying he was "genuinely offended" by Financial Services Authority (FSA) chairman Lord Turner's description of much of banking as "socially useless".
It appears that was just the start.
Now, Mr Spencer is calling on the Conservatives to introduce major reform of the public sector and is hinting strongly that he will move Icap's domicile out of Britain should Labour win the next election.
On Wednesday, however, Mr Spencer, whose fortune was estimated at £1.1bn in last year's rich lists, will be more focused on giving money away as Icap stages its 17th annual charity day, donating the entire gross revenues of that day's trading.
Last year, the day raised £11m – more than half of the amount that Children in Need raises. Icap's average daily transaction volume is more than $2.3 trillion (£1.4 trillion) and Mr Spencer is targeting a new charity record this year.
"Unquestionably it is the most exciting and fun day for the firm every year," he says.
Indeed, celebrities ranging from Prince William to Cherie Blair and Denzel Washington have been known to drop in, while Icap's 4,600 staff in 50 offices worldwide don fancy dress costumes.
"It's a fun, unique, slightly nutty day and the staff love it," he says. "We get them to speak to the clients and say: 'Go on. Give us a deal,' and they do. The clients divvy up. After all, it's not every day of the week that you get to do a deal with the heir to the throne."
So what is Spencer dressing up as this year? "The last time I dressed up, I was Sergeant Pepper. But, listen, I've got to take all these dignitaries around. I can't be dressed up as Widow Twanky or a stuffed chicken."
So he's not dressing up as Lord Turner then. Probably just as well. "I was offended by his comment as I think it's unnecessary and inappropriate," he says.
"No one doubts that there's been some poor practice in banking. I absolutely agree with that but I don't think it is for the regulator to make backhanded comments of that nature. A little introspection at the performance of his own regulator would probably be perfectly appropriate as well." [If he doesn’t like Lord Turner that makes him an A-OK bloke for me! -cs]
Mr Spencer is certainly not a fan of the regulatory reaction to the financial crisis. "In my view, we've seen the biggest financial crisis in history and there's a risk in the aftermath," he says.
"You get a blame culture. Somebody, somewhere must be blamed. Culprits must be found and culprits must be punished. The politicians seem to have decided that the easiest and most obvious culprits are the bankers, rather forgetting the culpability of the politicians, the regulators, the central bankers and rating agencies.
"They all, in varying degrees, have their fingerprints on this crisis. So we do have a witch hunt, almost, and we run a risk of material overreaction."
Mr Spencer supports Conservative Party leader David Cameron's plan to axe the FSA and the tripartite system of financial regulation that Gordon Brown introduced back in 1997.
However, he's wary of financial regulation in Europe under the former French foreign minister Michel Barnier, the European Union's new single market commissioner. Three new EU agencies created to oversee banking, insurance and pensions and securities have the power to impose rules on Britain by majority vote.
"A lot of people in the City are understandably nervous," he says. "They're fearful that the regulation of markets is going to be taken over in a very different and very politicised fashion, and that this could potentially be quite damaging to the City.
"The free market capitalist approach to economic development is very much superior to a centrist mandated approach," he says. "That, I feel passionately about.
"We need to build a framework where the level of excesses, the level of leverage that was allowed to build up in the system, the risk of that happening again is materially reduced."
Mr Spencer also argues forcefully against the proposed crackdown on the hedge fund industry. "Nobody has ever suggested that hedge funds were a material factor in the financial crisis," he says.
"I think the regulatory ideas emanating from Brussels on the hedge fund industry are profoundly unnecessary, damaging and will simply cause a flight of talented hedge fund groups to other jurisdictions for no benefit, no gain whatsoever."
Spencer is firing on all cylinders now, arguing that the financial crisis was brought about not simply by greedy bankers but by a confluence of lax monetary policy, government encouragement and regulatory tolerance of aggressive lending, a poorly-constructed regulatory framework and "rating agency incompetence or connivance", as well as some "poor" and "unprincipled" practices in banking.
"This frequent reference to 'casino banking', which is simpleton speak for proprietary trading within the banking industry – that's not what destroyed Northern Rock," he says.
"Look at Northern Rock, Bradford & Bingley, HBOS and Royal Bank of Scotland – all of them complied with regulations. In no instance did these banks go to the point of bankruptcy and have to be saved because of proprietary trading or anything like that. At the end of the day, these were classic banking collapses driven by very poor funding or very poor lending."
He doesn't think the proposed clampdown on pay and bonuses will make much difference, other than to reduce Britain's competitiveness. Ironically, Icap's present arrangements, including those around Mr Spencer's own salary and bonuses, would comply, although the company is not covered by the new rules as it is not a bank and doesn't trade on its own account.
Of course, Porsche-driving Mr Spencer, who owns 21pc of Icap, the world's largest inter-deal broker, would be seen by capitalism's critics as epitomising some of the features of the City they're most opposed to.
He is now frequently described as a City grandee but his success has come in one of the most testosterone-fuelled sectors of the City – no women were allowed in Icap when he co-founded the company, then called Intercapital, in 1986 – and ever since he can remember he has wanted to make money.
Mr Spencer is an inveterate gambler who once lost £10,000 in a night at backgammon and is said to have once started a market in the number of laced-up shoes under a table at a City lunch.
He has also been involved in a few scrapes in his time, being sacked twice early in his career for trading errors, including racking up huge losses in the gold market.
More recently, he was investigated and cleared over suggestions of insider dealing over a £5.5m purchase of shares in Marks & Spencer after meeting his friend, Sir Stuart Rose, at the time that he was being lined up by Sir Philip Green to help with his mooted takeover bid.
Inter-dealer broking is also a fiercely competitive sector and Mr Spencer has had well-publicised battles with the chiefs of rivals such as Collins Stewart and Cantor Fitzgerald over alleged poaching of staff.
He is keen on tax cuts as soon as possible in a Conservative government, though he recognises the budget difficulties awaiting George Osborne as potential Chancellor.
"Assuming that the Conservatives win, the first budget Osborne will introduce will have to be a pretty hard budget of freezing public sector pay, changing the pension age and various other difficult measures," he says.
"I think simultaneously reducing the top rate of tax he considers as politically and socially impossible. There are a lot of things they will need to change."
Indeed, Mr Spencer has a list. Top is major reform of the public sector, where he says productivity declined by 3pc in the 10 years to 2007, while private sector productivity increased by 20pc.
"No businessman would ever survive running a business if the productivity of that company declined over a 10-year period," he says.
"Bluntly, in Gordon Brown's 10 years as Chancellor and two years as Prime Minister he has presided over a huge bloated state sector that has become pumped with money, with declining output.
"If public sector productivity had improved at half the rate of private sector productivity, the budget deficit this year would be halved."
So would Mr Spencer leave the country if Labour wins? He's not saying. "Put it this way. If Labour wins, a hell of a lot of people will leave the country.
"A hell of a lot of the high producers of this country would depart."
Of course, companies can leave countries too, and over the past few years the likes of WPP Group, United Business Media and pharmaceutical group Shire have moved their tax base to other nations.
Would Mr Spencer ever move Icap? He seems to be considering it.
"In every company that's properly managed the directors have a duty to their shareholders. Our duty to our shareholders encompasses, from time to time, considering whether their best interests are served by moving the domicile to another country," he says.
"I am very significantly encouraged by the Conservative proposals to reduce corporation tax from 28pc to 25pc, and hopefully to lower it considerably further from there.
"I think that will be a major improvement to the competitiveness of the UK if they are elected. I think any debate about moving our domicile will immediately be dropped.
"If the Conservatives are not elected and if Labour continue to increase taxes as they probably will then, regrettably, we would presumably have to reconsider moving domicile."
He has never been tempted to become a non-domiciled Brit himself, he says.
In any case, Mr Spencer sees a lot of opportunity for Icap in the City at the moment, saying the company has invested heavily in technology and should benefit from the over-the-counter (OTC) market's move to electronic trading.
"That's a very big opportunity for us," he says. "We also have a big investment in post-trade services, which are all about reducing the risks in the OTC market.
"These services and our ability to make money out of them are very promising. This part of our business is growing more rapidly than any other."
He's still as driven as ever to make money, then. Does he regret anything in his pursuit of power and success over the years?
He doesn't think so. But he has changed one key part of his early career plan.
"I always thought I would spend half my career in business and the other half in politics," he says.
Despite his newly found love of talking publicly about it, he's not going to do the politics bit now.
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Michael Spencer CV
Born May 30, 1955
Education Worth Abbey School, Sussex, and Corpus Christi College, Oxford
Homes Holland Park, London; Suffolk and Manhattan
Other activities Owns spreadbetting firm City Index and is a shareholder and associate director of Ipswich Town FC
Interests Shooting, wine, collecting art, including the work of Pablo Picasso
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