Learning to manage. (A Survey of the City of London)

Economist (US), The, June, 1988

The downturn in financial markets has exposed the incoherent strategies and chaotic systems of the City's securities firms. But now the City is learning to manage, writes Charles Grant

THESE are dark days for the City of London. Its most glamorous industry, investment banking, had grown fat on a five-year bull run in the world's bond and stock markets. This petered out in the spring of 1987 in the bond markets, and equity markets crashed in October. Securities firms have reacted by pruning expansion plans, quitting markets and sacking staff. Insecurity and continuing low levels of business have resulted in poor morale throughout the City. At the same time, Britain's new system of financial regulation is adding to costs and imposing fresh burdens on management....

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