José Manuel Barroso believes London will remain 'a very important global financial centre'
José Manuel Barroso © EPA

Goldman Sachs has hired the former head of the European Commission José Manuel Barroso to help it through the fallout from the UK’s shock decision to quit the EU.

The Wall Street investment bank announced on Friday that Mr Barroso is joining as non-executive chairman of London-based Goldman Sachs International (GSI), the bank’s largest subsidiary. He will also be an adviser.

Mr Barroso, who presided over the commission for a decade, told the Financial Times that he will do what he can to “mitigate the negative effects” of the Brexit decision. If the UK loses access to the EU single market, US banks may need to move big parts of their large European businesses out of London.

“Of course I know well the EU, I also know relatively well the UK environment,” Mr Barroso said. “If my advice can be helpful in this circumstance I’m ready to contribute, of course.”

The former Portuguese prime minister led the commission from 2004-14, a period that included the financial crisis. He was a key figure in many of the financial sector policies that followed, including banking union.

“His advice and counsel in this time of monumental change and uncertainty . . . will be very important,” said Peter Sutherland, who stepped down as chairman of GSI in May 2015. Since then, the post has been filled by GSI non executive director Claes Dahlback.

The appointment comes at a time when Goldman has been mired in controversy as a salacious court case about a 2008 Libyan deal rumbles on and scrutiny increases over the bank’s role in raising money for 1MDB, a Malaysia state fund linked to possible corruption.

Mr Barroso would not speculate on whether banks based in the UK would be able to continue to use their UK licences to do business in the EU’s financial markets, a process known as passporting.

If the UK loses its right to grant passports, banks will have to find another EU country willing to regulate — and able to support — some of their most complex activities.

“We don’t know now exactly what will be the final outcome of negotiations,” Mr Barroso said, describing the passporting issue as “one of the most difficult and sensitive matters for the negotiation”.

“What I know for sure is that on both sides it will be intelligent and wise to have a fair negotiation,” he added. “Nobody wins from a confrontation.”

Mr Barroso would not be drawn on alternative locations for Goldman Sachs but said he believes London will remain “a very important global financial centre”.

On Thursday, the George Osborne, UK chancellor, began a campaign to convince the banks to stay, telling senior executives the UK will do whatever it can to safeguard the financial services industry.

Mr Barroso is planning to move to London, for now. Goldman Sachs will become his “most important occupation” but he will continue with some academic work at Princeton and universities in Lisbon and Geneva.

He said he remains dismayed at the Brexit vote. Goldman Sachs was one of the most prominent corporates in the Remain camp, donating £500,000 to the Britain Stronger in Europe campaign.

There has been a “clear loss of confidence, not only in the UK but also in Europe”, Mr Barroso said. “Confidence today is in very short supply, it’s probably the most precious commodity,” he added.

The referendum vote makes his new role at Goldman Sachs “more challenging”. “I like challenges, that’s why I’ve accepted this position,” he said. “I could have accepted easily others that were much more relaxed, I prefer in fact some position where I will have to commit myself.”

Mr Barroso said that in the past he had “of course” been critical “not only of the US” banks but of banks in general.

“I’ve made comments about the behaviour of many sections of the financial industry’s activities that in fact were at the origin of this crisis, that’s quite clear,” he said. “As president of the EC, I was leading an overall effort of regulation and supervision, including the creation of banking union in the euro area, to bring back stability, credibility to the financial sector.”

But he said he was “very impressed” by Goldman’s “commitment to the highest standards” on ethics and this his role as chairman of Goldman Sachs International would include reinforcing the firm’s culture of “integrity, consequence, diligence, responsibility”.

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