LONDON (Reuters) - The head of energy trader Vitol who helped fund the unsuccessful campaign to keep Britain in the European Union said on Monday the pound’s demise since the Brexit vote has helped to lower costs for his London offices.
Ian Taylor, also a donor to the ruling Conservative Party, told a Reuters Global Commodities Summit it was too early to say whether London could retain its global financial status because the rules dictating Britain’s divorce from the EU have yet to be agreed.
Swiss-based Vitol, the world’s largest independent energy trader with a turnover of $168 billion last year, has one of its main offices in London, a commodities trading hub.
Britain’s decision to leave the EU surprised global markets, dragging the pound to multi-decade lows and sparking fears in London’s financial center that businesses will flee abroad.
“Obviously, overhead costs inevitably go down in London which I suppose is marginally good for our shareholders in the sense that it’s cheaper to run London, but it’s still a pretty small part of our overall portfolio,” Taylor told Reuters.
“It makes London slightly more attractive,” he said.
The pound’s descent to 31-year lows against the dollar helps energy and energy trading companies because their revenues from crude oil, refined products and other commodities are denominated in dollars, while the weaker pound reduces the costs of large operations in London.
Christophe Salmon, chief financial officer at the world’s second largest oil trading house, Trafigura, warned however that the pound’s weakness could indirectly hit the ability of British banks to lend to commodities trading firms.
“With the decrease in the pound, UK banks may have more difficulty lending in U.S. dollars. We have seen this in Australia before when Aussie banks lowered lending limits to our business,” Salmon told the Reuters Global Commodities Summit.
Otherwise, he said, he foresaw no impact on his firm’s $97 billion business from Brexit.
Many business and top global banks warned they may move staff out of London especially if Britain loses, or fails to renegotiate access to, the European bank passport system. Without it, transactions would be more complicated and expensive.
“It’s hard to see that all the jobs that are here in the City, involving particularly some of the European passporting activities, will still be here, but it’s too early to say,” Taylor said.
“I‘m sure financial organizations are probably inevitably looking at their options but I can’t see London totally disappearing from the world of international finance.”
Vitol trades over 6 million barrels of crude oil and refined products every day, shipping over 300 million tonnes last year. Trafigura shipped 146 million tonnes of oil and products in the same year.
Additional reporting by Dmitry Zhdannikov; Editing by Ruth Pitchford