WSJ(12/15) News And Insights From London's Financial Center

London Losing

Financial Edge?

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Mayor: Taxes and Rules

Are Driving Companies

To 'Competitor Cities'

Echoing warnings from some bankers, London's mayor's office said the City faces serious threats to its status as a financial center.

In a rare official admission, a report commissioned by Mayor Boris Johnson concluded that London position is under threat as it loses business to "competitor cities that have developed aggressive strategies to steal business away."

The report includes suggestions to fight back, such as an overhaul of the U.K.'s insolvency laws which have seen companies with assets tied to Lehman Brothers' bankruptcy struggling to get them back. It makes a plea to the U.K. Treasury to reduce corporate tax and to make tax policy more consistent.

The gloomy conclusions come from a report prepared by a group of finance industry executives. Lower taxes and more "favorable" regulation has led to cities like Dublin and Luxembourg attracting more than GBP 420 billion ($630 billion) of investment funds away from London over an unspecified period of time, the report says. In insurance, the zero percent corporation tax of Bermuda has seen London lose 700 jobs to the island since 2000 with a resulting loss of GBP 450 million in taxes to the Treasury, the report says.

Among other problems, the report, which canvassed industry executives, found the British capital suffered from too much U.K. and European Union regulation, a lack of proficient science graduates, and a creaking infrastructure.

Mr. Johnson's soul-searching mirrors a similar approach by New York City Mayor Michael Bloomberg, who commissioned a report to look at threats, in particular from London, to his city's financial services sector which concluded in 2007.

-- Alistair MacDonald

Successor Search

The search for a successor to London Stock Exchange Group's chief executive, Clara Furse, has begun in earnest with possible candidates receiving calls from an executive recruiter, according to people familiar with the matter.

Anna Mann, a founder of London finance headhunter Whitehead Mann who left that firm in 2004 to set up MWM Consulting, is leading the search, according to those people.

Ms. Mann was hired in late October following talks between Chairman Chris Gibson-Smith and the LSE's board of directors, which includes Ms. Furse, about the appointment of a new LSE chief executive next year.

A spokeswoman for the LSE , Europe's biggest exchange operator measured by the market value of domestic companies listed, said the board is engaged in succession planning but declined further comment.

Ms. Mann is one of the biggest names in U.K. headhunting and has worked for the LSE on high-profile jobs before. She placed Ms. Furse, as well as her predecessor, Gavin Casey, as well as Mr. Gibson-Smith.

Ms. Mann's list of contenders isn't known. She didn't return calls seeking comment.

Ms. Furse, who was appointed in 2001 after Mr. Casey resigned, won plaudits for resisting a series of hostile takeovers by rivals including Deutsche Boerse, Euronext and Nasdaq between 2001 and 2007.

-- Luke Jeffs