Swiss Re, the second largest reinsurer in the world, is on a collision course with planners over draft proposals to develop the largest-ever building in the Square Mile. It is hoping to secure planning consent for 800,000 sq ft of offices on the site of the former Baltic Exchange, bombed by the IRA in 1992. Last year, architect Norman Foster proposed an even larger structure - Europe's tallest building - for the same site. English Heritage vetoed it.
The same planning restrictions may prevent Swiss Re from putting its expanding financial operations under one roof. The insurance company has agreed to pay pounds 100m to the Norwegian construction company Kvaerner if it wins planning approval. Mr Foster would remain the architect.
At a meeting in April to discuss a new building, Swiss Re told Corporation planners it required 600,000 sq ft net space to house its operation. This is twice the amount of space it presently occupies, but sources say Swiss Re is in acquisitive mood. Last year it bought Mercantile & General and in the coming years it plans to add asset management and banking divisions to its core business.
However, it is understood that Peter Rees, the Corporation's chief planning officer, opposed a building of this scale as it would break planning criteria.
Opposition is rooted in the fear that English Heritage will veto Swiss Re's plans. The preservation body has agreed to the demolition of the listed exchange but has warned against putting a huge building on the site. This could mean cutting Swiss Re's space requirement by a third.
Sheree Whatley, chief financial officer at Swiss Re, said: "We will not compromise to that extent. We have set our hearts on this site and hope to submit an application by October."
Sources say this is typical of the City Corporation's failure to cater for the very largest occupational requirements in the Square Mile. Mergers across the financial markets are spawning a generation of mega-property requirements approaching a million square feet. But identifying a site, negotiating planning and developing a building of this size has proved impossible in the Square Mile.
This is in contrast to Canary Wharf, where a major scheme can be delivered in less than three years. In April, HSBC announced it was quitting the Square Mile for Docklands to develop a pounds 500m world headquarters at Canary Wharf.
Leading property adviser Jonathan Edwards, who owns a niche City surveying practice, believes the Corporation and the property industry have yet to come to terms with the needs of modern business occupiers. "If a company wants a huge amount of space within the next three-to-five years it will have to look outside the City. The property industry has yet to wake up to the needs of the largest occupiers while the planners should be more sensitive to commercial justification for space."