Has the UK’s financial HQ done anything meaningful to protect itself from future economic shocks? Stephen Moss goes deep into ‘enemy territory’ to find out

Clouds gather over the financial district of Canary Wharf in east London. Photograph: Matt Cardy/Getty

Justin is a senior banker specialising in mergers and acquisitions at a big investment bank in London's Canary Wharf. If anyone is a “master of the universe”, it is Justin, who never does tell me how much he earns, nor even how many digits his income runs to. I'd hazard a guess at seven, maybe eight in a good year. “I'm underpaid for what I bring in to the bank,” is all he'll say.

My initial contact with him is a Saturday-morning phone call. I am just struggling into consciousness; Justin has been up for hours, sealing a deal in Africa. He says he gets to his office at 7am every day, and is often still there at midnight. The attraction of the City of London for financiers is that it spans time zones and acts as a bridge between the US and the rest of the world – hence the 17-hour day. The other seven hours can be left to Wall Street. Even investment bankers occasionally have to sleep.

A few days after our initial phone conversation (when Justin warns me that “we see the Guardian as the enemy”), we meet at a hotel in Mayfair, where he has been having lunch with clients. Mayfair, Canary Wharf and the old City, based around the Bank of England, are the three centres of London's financial world. Canary Wharf – modernist, faceless, towering – houses the mighty investment banks; the City – quirky, crowded, knotty, historic – has the brokers, insurers and ancillary services; Mayfair – discreet, stylish, cosmopolitan – is home to the hedge funds and private equity companies.

I am trying to understand the culture of the City; to find out whether those who work there have learned the lessons of the crash of 2007-08, and if the City can ever be made “disaster proof” – a question that has vexed politicians, financiers and the public ever since (indeed Mervyn King, the former Bank of England governor, has been warning the Hay Festival that another Fred Goodwin – the disgraced former Royal Bank of Scotland boss – will emerge unless the banking system changes).

Seeking an insight into the City’s problems is a thankless task. The terminology is baffling – I still can't distinguish between a credit default swap (CDS) and a collateralised debt obligation (CDO); organisations, including the Bank of England that refuses to grant me an interview, thrive on opacity; and City insiders are paranoid about talking to the media. I have never met so many people who insist on anonymity and demand to see quotes, or who, like Justin (not his real name), want both. He really must see me as the enemy, but to his credit he does talk – even if later he doubts whether he should have given the interview.

“The City is the equivalent of Venice in the middle ages,” Justin tells me. “It's a massive international melting pot that drives London and the rest of the country.” He accepts there are bad guys, especially among the hedge funds, but insists the malign aspects of the City are outweighed by its benefits to the UK economy – providing more than 10% of the Treasury's total tax take. “To the aesthete Guardian, the average City trader looks pretty ugly because they drive swanky cars and are spivs,” he tells me, “but you should respect the mores and the facts.” I promise to try.

The City of London is opaque to outsiders. Photograph: Martin Godwin

Justin startles me by extending his Venetian analogy. If the City is Venice, he says, then the rest of the UK is Mestre – the boring bit on the other side of the causeway that no one visits. “The banks are here [in the UK], but almost everything they do is not here,” he says. “I've got no clients in this country. I've got clients in Russia, Mexico, South Africa, Australia, Switzerland. That's very normal in the City. The City doesn't service London and the UK; it starts off in India and goes all the way to Ireland, then up to Russia and down to Cape Town.” The City is not especially interested in the UK; it exists to serve ‘Emea’, a land known only to bankers: Europe, the Middle East and Africa.

He doubts whether I will really grasp the City. “One of the problems for you is that the big banks are so massive. If I leave my desk and walk 10 yards, I have no idea what the people sitting there do. I'm on one floor of a huge, multi-storey building, and each floor is the size of a football pitch.” It sounds loathsome. Does he enjoy it? “With a bank you have to be in a competitive frame of mind. If you're good at it, you like it and you make money for yourself and the bank. You enjoy it and you like the buzz of money. If you're not good at it, you're unhappy, you don't make any money and eventually you get shot. I really hate it if I'm not doing well. It's like a big competitive cocktail party where you have to be personable and outgoing and persuasive, but also you've really got to think through the issues, understand the complex beast you're working for, and exploit all the various things it can do. Most of these banks can do anything.” In a good way, he means...Continue Reading

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