London — IT was once a cozy, tightly knit club, where old school ties prevailed and outsiders were excluded. A man's word was his bond, and long lunches were the order of the day. But now, the tradition-bound world of the City, the crowded square mile housing London's financial community, is being swept away -- a casualty of the ``Big Bang,'' the massive deregulation of the British stock and government securities markets which takes effect next Monday.
Bankers and brokers believe it is the most profound upheaval in the City's history, far more sweeping than Wall Street's ``May Day'' deregulations in 1975. Fixed commissions for brokers are being abolished, opening the way to intense competition, and restrictions that kept the functions of commercial banks, merchant banks, brokers, and traders separate are being eliminated.
For the most part, the bowler hat has disappeared. The new symbol of success is the Jaguar or Porsche, usually driven by a member of the group dubbed London's ``whiz kids.'' Eating habits have also undergone a transformation, with a quick sandwich at one's desk replacing the traditional two-hour lunch and drinks.
``The long midday lunch is over,'' says Glen Moreno, group chief executive of Citicorp's investment bank for Europe, the Middle East, and Africa. ``I'm sitting at my desk eating a sandwich now. Lunch tends to be with a glass of tomato juice and lasts an hour.''
Even restaurants are catering to the new habits. Coates Bar & Restaurant has a bank of TV monitors with the latest news and financial updates amid its severe, ultramodern d'ecor. The caf'e is planning to install direct dial phones to the stock exchange. This contrasts with more traditional City restaurants, which have wood paneling, white tablecloths, and a genteel atmosphere.
Longer, 12-hour days are commonplace. The stock exchange now opens 30 minutes earlier; morning meetings have been moved up; and many arrive in their offices to catch the Tokyo market before it closes. Even the trains are running earlier.
``A poster which shows a little boy and asks, `When did you last see your father?' could apply to a lot of us,'' says Philip Howard of Shearson Lehman Brothers.
David Lough, chief executive of County Natwest Capital Markets Ltd., the investment banking arm of Britain's largest bank, National Westminster, calls the Big Bang a ``complete modernization and revolution for the domestic securities market of Britain.''
Long the leader in the Eurobond and foreign-exchange markets, the City is opening up the stock exchange to international competition. The exchange is now called the International Stock Exchange. Centuries-old membership restrictions have been lifted, and financial powerhouses like Merrill Lynch, American Express, Chase Manhattan, Barclays Bank, and the Union Bank of Switzerland are now members.
In the United States, the Glass-Steagall Act still prevents commercial banks from doing securities transactions. But in London, that barrier does not exist.
With the emphasis on globalized trading, London, situated in the middle time zone between New York and Tokyo, is now poised to regain its role as one of the world's major financial centers.
``London can expect to play a pivotal role,'' Mr. Lough says. ``You can talk on the same day to Tokyo in the morning and New York in the afternoon. This is the source of its strength.''
One result has been a wild explosion of mergers, acquisitions, expansion, and personnel raids. Once characterized by relatively small firms, London's securities business is now dominated by newly formed financial conglomerates. British commercial banks, such as Natwest and Barclays, or merchant banks like Kleinwort Benson and S. G. Warburg, have spent huge sums to buy stockbrokers and jobbers, or marketmakers.
US commercial banks such as Citicorp and Chase Manhattan have also chosen the acquisition route, buying up British firms, while Merrill Lynch has elected to hire locally. These new teams are now largely in place. Although exact figures aren't available, over the last two years more than 100 companies have been involved in acquisitions worth more than a total of $2 billion.
This pell-mell expansion has meant a sweeping change in the City's life style. Specialist traders and sellers in high finance, many of them only in their 20s, are commanding salaries normally found on Wall Street -- the result of growing demand for skilled personnel in the City's competitive new atmosphere.
A youthful bond salesman with two years' experience, for example, can expect to earn a total compensation package of as much as 100,000 ($144,000), with a bonus and car thrown in.
``The City is more meritocratic,'' says Lough. ``It's a case now of what you know rather than who you know.''
Most experts predict that competition will become cutthroat and only the top players with the deepest pockets will survive. ``It's going to be tough for everybody,'' says David Cohen, deputy head of equities at Chase Manhattan Securities.
While they expect to compete head on in British domestic securities, for their part, American financial giants believe their strength lies in the muscle they can flex in the international bond and equity markets.
But British conglomerates, no longer assured of domination of the domestic securities business, are determined to beat their increasingly powerful foreign rivals like Citicorp and Nomura Securities.
``We're going to try and make sure the Americans don't dominate the market,'' says Lough of Natwest. ``There is no doubt we will get a very good run for our money.'' But, he quips, ``We hope to see off the Americans completely.''