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UBS Threatened to Scale Back in London Over HQ

UBS threatened to scale back its presence in London if the government followed advice from a heritage body that effectively blocked the redevelopment of its City of London headquarters.

UBS
UBS

In a confidential letter sent to Jeremy Hunt, the secretary of state for the Department for Culture, Media and Sport, Carsten Kengeter, chief executive of UBS’ investment bank, described the “serious consequences” for UBS and the City of a decision to list the 1980s Broadgate office complex as of special architectural interest.

The Swiss banking group had agreed to occupy a new £850 million ($1.4 billion) headquarters at Broadgate for its 7,000 employees, which would have demolished two existing buildings on the campus owned by British Land and Blackstone.

Mr Kengeter said a decision to list the buildings – thereby preventing demolition – would force the bank to “fundamentally reconsider our occupation strategy in London”, given a lack of suitable alternatives. It would also “impair the City‘s ability to attract and retain global financial organisations like ours”, he said.

The letter was seen by the Financial Times following a Freedom of Information request. UBS declined to comment. It was copied to George Osborne, chancellor, and Vince Cable, the business secretary, and referred to the chancellor’s desire to keep the City of London as the world’s leading centre for financial services.

English Heritage, the government’s conservation adviser, recommended that the buildings be protected with one of the most stringent listings following calls from conservation groups. This recommendation was rejected by Mr Hunt on June 15.

Mr Kengeter said in his letter on June 3 that there were no other suitable options in the City of London.

“If the proposed development of 5 Broadgate has to be abandoned because 4 and 6 Broadgate...are listed, we will have to find alternative future accommodation that we can occupy by 2016,” he wrote. “We do not consider this to be feasible given the scale and nature of the space required. Such a decision would force us to fundamentally reconsider our occupation strategy in London.”

The Twentieth Century Society, which was one of the main advocates for the listing, complained after Mr Hunt’s decision that it believed that “factors other than those that should be considered in the listing process have decided the fate of an important historic building”. Only “architectural or historic significance” should be taken into account, it said.

A spokeswoman for Mr Hunt said that the decision had been taken on the basis of architectural merits alone and was not influenced by any wider economic factors.

“The only factors that are taken into account when considering a building for listing are architectural and historic interest, other matters are irrelevant,” she said.

The letter is the first time that the bank’s concern over the future of its London building has been voiced. Even so, the likelihood that UBS would have walked away from London as an investment bank is remote, although this was not stated in the letter.