Wall Street banks will increasingly move global functions to London to take advantage of time zones, immigration laws and the regulatory environment, leading US bankers say.

Senior executives at Goldman Sachs, Citigroup and Lehman Brothers have privately indicated that London was likely to become the hub for financial services as more global operations move their headquarters to the City. Goldman Sachs recently moved Edward Forst, its chief administrative officer who is responsible for all capital allocations at the firm, to London. It felt that he was better placed there than in New York to speak to markets from Tokyo to the US West Coast.

Last month, Citigroup unveiled a management shake-up under which five London-based executives were given global responsibilities for specific products. Citigroup was also moving its head of commodities to London. Echoing the trend, Lehman recently hired Jason Tudor as its global head of metals, a position based in London.

A senior banker at Deutsche Bank, which shifted its investment bank from Frankfurt to London in the late 1990s, forecast that more European banks would put their global headquarters in the City, capitalising on its recent momentum.

A favourable taxation regime has provided an additional lure. However, that could come under threat if the Treasury extended the crackdown it is threatening on private equity deals to other corners of the City.

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