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Morgan Stanley has agreed to keep its Europe headquarters in Canary Wharf for another 14 years in a major boost for the east London financial centre that has recently seen a string of high-profile departures.
The US investment bank has opted to add another decade to its lease, extending the agreement from its original end date of 2028 to 2038.
The agreement follows months of speculation surrounding Morgan Stanley’s plans, particularly following several high-profile departures from Canary Wharf to the City of London by other major financial sector tenants.
According to City AM, Canary Wharf office vacancies are expected to increase to 16.6 per cent in Q4 2024, up from 15 per cent in the same period the previous year.
Notable departures from Canary Wharf include HSBC, Moody’s and law firm Clifford Chance. Meanwhile, Barclays recently extended its lease on its headquarters until 2039. JPMorgan and Citi, both owning their buildings, are expected to remain in the area, while discussions are underway for fintech firm Revolut to secure new space for its headquarters on the estate.
As part of the agreement, Canary Wharf Group has committed to funding an extensive refurbishment of the 547,000 sq ft building at 20 Bank Street, including improvements to its energy efficiency. Additionally, Morgan Stanley intends to retain office space at the nearby 25 Cabot Square.
Canary Wharf Group has been striving to retain major office tenants while diversifying its offerings beyond financial services, aiming to attract life sciences occupiers, residential developments and leisure amenities.
As announced by chancellor Jeremy Hunt in his Spring Budget, Canary Wharf has received a taxpayer loan of £118mn to enhance its life science capabilities and facilitate the construction of new residential properties.
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A senior regulatory official from the US Federal Deposit Insurance Corporation revealed on Tuesday that the agency is considering a plan to ensure asset management giants such as BlackRock, Vanguard and State Street adhere to their passive roles in US bank investments.
As reported by Reuters, FDIC board member Jonathan McKernan has proposed directing FDIC staff to regularly examine large asset managers that hold more than a 10 per cent stake in FDIC-regulated banks, to ensure they do not unduly influence bank operations.
McKernan told Reuters that he intends to raise this issue at the FDIC’s April board meeting.
McKernan and Rohit Chopra, another FDIC board member and director of the Consumer Financial Protection Bureau, have reportedly met with BlackRock and Vanguard to discuss their holdings.
Currently, asset managers operate under “passivity commitments”, where they commit to refraining from certain influential activities in banks where they hold large investments in exchange for lighter regulatory scrutiny. In a January speech, McKernan stated that regulators should do more to ensure asset managers uphold these commitments, as they currently rely on firms to self-certify.
Reuters reports that the financial industry opposes increased oversight, questioning the need for additional regulations on passive investments without solid evidence of harm to banks and depositors.
However, asset managers have faced criticism for exerting undue influence on the management of their portfolio companies. US lawmakers have accused firms such as BlackRock of prioritising political motives, such as environmental, social and governance factors, over financial goals.
The largest US banks, including JPMorgan, Bank of America, Wells Fargo and Citi, count the big three asset managers among their leading shareholders.
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Goldman Sachs’ asset management division has acquired a stake in private credit specialist Kennedy Lewis Investment Management. As reported by the Financial Times, citing sources familiar with the matter, the bank’s private equity unit, Petershill Partners, agreed to purchase around 20 per cent of Kennedy Lewis, valuing the firm at more than $1bn.
According to the FT’s sources, Goldman is purchasing the stake from Italian asset manager Azimut, which will exit from Kennedy Lewis.
Founded in 2017 by David Chene, formerly of CarVal Investors, and Darren Richman, a former Blackstone executive, Kennedy Lewis has experienced significant growth, managing assets exceeding $14bn. The firm specialises in originating deals in niche areas of debt markets.
Goldman is renewing its focus on asset management, with a specific emphasis on private credit, as a part of its growth strategy following its shift away from consumer lending and retail banking ventures.
With $2.8tn in assets under management, including $450bn in alternatives, Goldman has previously stated that its asset and wealth management division could contribute one-third of its total net revenues by the end of 2025.
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Société Générale and US asset manager AllianceBernstein have launched a joint venture focusing on global cash equities and equity research sectors.
The collaboration aims to bolster SocGen’s client base, particularly in areas such as initial public offerings, as it hopes to expand its reach beyond its core markets in Europe.
The move follows in the footsteps of French rival BNP Paribas, which expanded its equity research arm, Exane, in the US following its acquisition in 2021.
The joint venture, named Bernstein, consists of over 750 employees and operates through two distinct legal entities. One entity is headquartered in New York, catering to US markets, while the other is based in London, serving the European and Asian regions.
