BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Insurance

Swiss Re to sublet part of London’s ‘Gherkin’ tower

Posted on November 14, 2016

The global reinsurer Swiss Re is seeking to sublet 85,000 sq ft of office space in London’s “Gherkin” tower, in the latest sign of financial services groups cutting their property footprint in the city.

Swiss Re’s move to shrink its space comes as insurance companies grapple with an era of low rates, and as other financial services companies — such as investment banks — also seek to sublease space in London’s financial districts.

Swiss Re, which is the main tenant in the 41-storey building, is marketing the space with almost 17,000 sq ft available immediately and the rest in 2017, according to two people familiar with its plans.

It is seeking £69.50 per sq ft for the sublease, the people said, higher than the rent Swiss Re itself pays for the space in one of London’s best-known skyscrapers. The building, formally called 30 St Mary Axe, is owned by the Brazilian billionaire Joseph Safra.

Swiss Re is cutting its space in the building because it is seeking to be more efficient, rather than because of any reduction to headcount, it said.

“We have introduced agile working, which means a lot of our colleagues no longer have an assigned desk in the London office. Instead, you have a home area where your team sits and you take one of the available desks,” said a spokeswoman for the company.

“We have reshaped the floors and we now have available floor space to rent out … If you see that your occupancy rate of the individual desks is not high, why would you pay for office space in such a prime location — that’s not very efficient.”

Swiss Re reported a drop in profits in the first half of 2016 as it paid out on a series of natural disasters such as wildfires in Canada. Meanwhile, the insurance sector is feeling the pinch from low interest rates.

Investment banks including JPMorgan and Citigroup are subletting space in the UK capital as they seek to cut costs, while the Brexit vote has deterred some occupiers from making decisions on new office space.

The central London office vacancy rate rose from 3.9 per cent at the start of 2016 to 4.8 per cent at the end of the third quarter, according to Deloitte Real Estate.

Other tenants in the Gherkin, which is in the City of London’s insurance district, include the law firms Kirkland & Ellis and Hunton Williams, the German bank Deutsche Pfandbriefbank and the insurer Standard Life.

Swiss Re originally owned the 538,000 sq ft building, which opened in 2004. It sold the development to IVG Immobilien of Germany and the private equity firm Evans Randall; the building was placed in receivership in 2014 after IVG entered insolvency and was subsequently sold to Mr Safra.