U.S. bank JPMorgan has bought two major office properties in London, including the former Lehman Brothers building, holding off on plans to build a skyscraper as its main European headquarters.
JPMorgan bought the Lehman building in the Canary Wharf financial district for 495 mln pounds ($773 mln) from the Canary Wharf Group (CWG), to group together all of its investment bank in London.
It also said on Monday it was still reviewing its use of a skyscraper complex with an estimated cost of 1.5 bln pounds nearby — a site it bought in late 2008 as part of a long-term ambition to consolidate its London properties.
"That will be a project that continues … and George (Iacobescu, CWG chief executive) and I will talk about the best utilisation for that," JPMorgan chief administrative officer Frank Bisignano told a news conference.
The bank was committed to having offices in both the City of London financial district — where it bought the 60 Victoria Embankment site it has been leasing — as well as in Canary Wharf, a second financial district in London's former Docklands.
"Under one roof has never been the sole objective because when you think about the workforce and all the things we do, we will always have a presence in the centre of London and out here (Canary Wharf)," Bisignano said.
Work stopped on the Riverside South site earlier this year, triggering talk JPMorgan, feeling the heat from negative sentiment against banks after the crisis, would axe the conspicuous project.
That work will now continue, with foundations having already been laid for a 2.4 mln square foot development, more than twice the size of the 1 mln sq ft Lehman building, while JPMorgan reviews its use.
"Short term, we will be building it up to street level and then we will obviously also be reviewing what is best to go on that site," John Garwood, a spokesman for CWG, majority owned by Songbird Estates, told Reuters.
Shares in Songbird, whose top shareholders include Qatar's sovereign wealth fund and China Investment Corp, were up 3.1% at 139.8 pence by 1350 GMT, ahead of a British property stocks index up 0.3%.
LONDON CALLING
JPMorgan said it bought the 420,000 square feet property on 60 Victoria Embankment from private equity firm the Carlyle Group for an undisclosed price.
It had been leasing the property, near the Bank of England and within the City of London, since 1991 for its Treasury and Securities Services division.
"These properties are long-term investments and represent our continued commitment to London as one of the world's most important financial centres," JPMorgan chairman and chief executive Jamie Dimon said in a statement.
Bisignano denied the investments were a risky bet on the direction of a commercial real estate market still recovering from its worst downturn in decades. "We do business here. We are a buyer of space and we are occupying the space," he said.
Britain's relationship with bankers has remained uneasy, with business secretary Vince Cable saying on Sunday banks should not underestimate the government's determination to act on pay and bonuses.
London mayor Boris Johnson, present at the news conference, said: "What they (JPMorgan) really wanted to hear from us was that London was receptive, that the political environment was not hostile".
JPMorgan's investment bank will move into 25 Bank Street, previously occupied by failed Wall Street rival Lehman, by 2012, turning it into the unit's European headquarters.
Its head, Jes Staley, signalled JPMorgan had no imminent plans to change the size of its 11,000-plus London workforce: "There is no plan to grow, no plan to shrink, probably where we are is pretty good for right now."
