City University Business School plans to challenge the London Business School's position as the capital's only world-class player in business education.
The school's new dean, Lord Currie of Marylebone, said it would take ten years to turn the school into a serious rival to the LBS. Lord Currie previously spent 12 years at the LBS, which he watched develop from the United Kingdom's leading business school into a premier-league establishment with an international reputation.
"There is room for two leading business schools in London," Lord Currie said. "It will provide healthy competition."
A £5 million donation from Sir John Cass's educational foundation has allowed work to begin on a £50 million-plus, five-year facelift for the school. The money will go towards new premises, which it is estimated will cost £43 million. City University has pledged £20 million and the rest of the money has been raised or borrowed.
The new building will be adjacent to the school's Barbican premises. "It will become the intellectual hub of the City of London," Lord Currie said. "Business leaders will come here to discuss issues. It will be a forum for the city."
He said that being part of a university had both advantages and disavantages for a business school. "This latest development success is in part thanks to City University's well-established links with the City. But, inevitably, there are tensions when one part of a university receives better facilities than the others."
Lord Currie has already said that he will be looking to boost pay to attract the best staff.
In this year's Financial Times MBA rankings, the LBS was ranked eighth in the world while City came 73rd.
From August next year, the school will be renamed the Sir John Cass City of London Business School.
The university is hoping to receive further financial support from the foundation.