It will be virtually impossible for New York to recapture the banking business that has recently moved away from the US to places such as London, a senior US banker warned yesterday.

The best New York can hope for is to slow or stabilise this financial flight by implementing regulatory reform, said Thomas Russo, vice-chairman of Lehman Brothers.

"The key question is whether this trend can be slowed or stabilised. There is some chance of that. But it probably cannot be reversed," he said, speaking on the fringes of the annual World Economic Forum in Davos.

"That means we will pay a price in jobs, just as we are seeing with the auto sector. Once you lose something, it is very hard to get it back."

Mr Russo's comments follow the publication of a report by McKinsey this week which warned that, if current trends continued, New York could lose up to 7 percentage points of its share, equivalent to 60,000 jobs, over the next five years.

New York mayor Michael Bloomberg and Chuck Schumer, a senior senator who commissioned the report, said much of this decline could be stemmed if the US implemented regulatory reforms.

However, they conceded New York was likely to lose market share as a result of growth in capital markets overseas.

Mr Russo was a member of a panel of academics and Wall Street leaders who recently called for similar changes to prevent the US "losing its leading competitive position as compared to stock markets and financial centres abroad". - (Financial Times service)