City hedge fund exodus begins

Date: Monday, September 28, 2009
Author: Kate Walsh, Times Online

BREVAN HOWARD, the UK’s largest hedge fund, is planning to open an office in Switzerland, perhaps signalling the beginning of a mass exodus by financial groups from London.

The hedge fund, which has assets under management of close to $27 billion (£17 billion), has instructed property agents to find an office in the tax haven with capacity for at least 100 staff. It has narrowed the search to Geneva and the nearby Nyon.

In June, James Vernon, the firm’s chief operating officer, said that a proposed EU directive on hedge-fund regulation would make it “impossible” for it to do business in the UK.

Moving to a low-tax jurisdiction would also save its highly-paid traders millions in taxes. The firm employs about 100 investment professionals, from a workforce of 240 in London. Their performance fee will be subject to the new 50% income tax rate coming into force next April — in Switzerland the rate would be closer to 25%.

One London-based hedge-fund manager said: “They have no choice but to do this. We tried to hire a trader last week but he said he would not join unless he could be based in Geneva. These people don’t want their personal fortunes subject to the ever-changing whim of the UK government.”