The Financial Times rejects Milan as a potential heir to the City, which is itself destined to lose relevance after its divorce from the European Union. It does so after a long preamble on the “rebirth” of the Italian capital of finance and business, stressing a change of mood to which the international spotlight offered by Expo 2015 also contributed decisively.
“In Porta Nuova, now owned by Qatar, gleaming new skyscrapers rival the spires of the Duomo,” writes the London newspaper, adding that “while Rome is in decline under the populist Five Star Movement mayor, Milan has flourished thanks to a series of moderate, business-focused leaders.” This is the FT’s picture of the Lombard capital: “The city is home to two of Europe’s largest banks, Intesa Sanpaolo and Unicredit. It hosts the headquarters of Yoox Net-a-Porter and Gucci (owned by Kering). Pirelli (controlled by ChemChina) is preparing its return to Piazza Affari in October, because the Italian stock exchange is becoming a hub for high-end consumer goods. The French chief executives of Unicredit, Generali and Telecom Italia have eased fears that the Italian business world is a closed market.”
Not to mention the efforts to attract foreign capital and encourage the return of the brain drain, through recent initiatives by Minister Pier Carlo Padoan. All these positive efforts, however, are overshadowed by the ambitions of a Milan that has launched a bid judged “late” to grab a share of the business freed up by Brexit.
“Some officials acknowledge that it is implausible to regard Milan as a rival to Frankfurt and Paris in the competition to host UK bankers after Brexit,” writes the prestigious financial newspaper, citing reasoning attributed to Alessandro Barnaba, co-head of international sales and marketing at JPMorgan, based in London. According to the manager, Milan will never be considered a “top destination” for financial institutions leaving London, because “political instability is still perceived as high”. The high cost of capital in Italy, the result of unstable politics and an enormous debt burden, would make the city unattractive, he says.
The city of the Madonnina, however, scores highly on “soft power“, for example in terms of quality of life. A factor which, according to Barnaba, is attracting some bankers senior enough to be able to live in Milan and commute to London or Frankfurt. JP Morgan is reportedly planning to double the number of its employees in the city, to 350 people,” Barnaba is said to have stated.
What spoils this attractive image, the FT continues, are the concerns voiced by returning expatriates and international observers about the reality of working in Italy, Milan included. In 2016, the newspaper recalls, Italy ranked 44th out of 190 in the World Bank‘s “Ease of doing business” ranking and stands in 60th position, between Cuba and Saudi Arabia, in the corruption perceptions index. Not only that. According to the Global Financial Centres Index (GFCI), a ranking of the major financial centres worldwide published by the City think tank Z/Yen, Milan ranks only 54th, up from 52nd. Very far from Frankfurt (11th), Paris (26th) and London, which remains at the top, followed by New York, Hong Kong and Singapore.
“The people of Milan,” the FT concludes, “need politicians in Rome to deliver deep structural and cultural reforms if Italy’s most cosmopolitan city is to open up fully to international business.”
It is worth remembering that Milan has given up applying for the European Banking Authority (EBA), while it is said to be in the running to host the other European agency due to leave London by 2019 as a result of Brexit: the European Medicines Agency (EMA). It will have to compete with 22 other European cities: Amsterdam, Athens, Barcelona, Bonn, Bratislava, Brussels, Bucharest, Copenhagen, Dublin, Helsinki, Lille, Porto, Sofia, Stockholm, Valletta, Vienna, Warsaw and Zagreb. The cities in the running for the EBA, by contrast, will be Brussels, Dublin, Frankfurt, Paris, Prague, Luxembourg, Vienna and Warsaw.
12 September 2017, by Pieremilio Gadda
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