Germany tries to lure European Bank

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The Independent Online
THE German government is trying to persuade the European Bank for Reconstruction and Development (EBRD), one of the few recently created international institutions to be based in London, to move to Bonn.

German officials have held secret talks with Jacques de Larosiere, the president of EBRD, who is considering moving the bank out of its expensive City headquarters. Bonn has offered very cheap office space as an incentive. Meanwhile, the bank's landlord in London, Deutsche Bank, may need EBRD's Exchange Square office for its own expansion plans.

De Larosiere is desperately searching for ways of cutting the bank's heavy costs to restore the damage done to its image by the excessive spending of his predecessor, Jacques Attali. Lavish offices earned the bank the sobriquet "the glistening bank".

The German proposal has opened up a deep rift within the EBRD. One group feels that after £60m has been spent on the office it would be a public relations disaster to move. The British government would also strongly resist any attempt to move the bank to Germany, although it agrees that its costs are too high.

However, de Larosiere is understandably frustrated by his efforts to cut costs, which are constantly undermined by the layout of the Exchange Square offices and by the £17m annual rental cost. Some staff claim that many of de Larosiere's efforts to make savings have actually cost more money.

One example is the decision to close the 11th-floor Chopin executive restaurant and Attali's former office on the 12th floor. Both floors have been lying empty for more than nine months and are costing the bank £2m a year in rent. All efforts to sub-let them have failed because it could cost a further £2m to turn them into normal offices.

Furthermore, having closed the Chopin restaurant, de Larosiere declined to take visiting dignitaries from eastern Europe to the first-floor staff canteen for lunch. He was forced to spend more money building private dining rooms around the canteen.

Another example is the decision to sub-let the second floor. After money was spent on renovating it, a tenant was eventually found. Unfortunately, the EBRD is losing money from the deal because the tenant is paying considerably less than the bank for the floor.

Key to any move from the Exchange Square office is the attitude of Deutsche Bank. The German bank is planning to beef up its presence in London by building a securities operation around its subsidiary Morgan Grenfell. Doing so would require bigger office space. The EBRD's Exchange Square building would be ideal.

Other ideas circulating within the EBRD are plans to move to another site in London. This would be less politically sensitive. Britain feels it was given the bank as part of a complex deal involving the location of a number of international institutions. One possibility would be to move to the Isle of Dogs or somewhere in west London.

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