London remains the leader in the European banking industry, but its rivals are growing rapidly


Don’t believe too much what you read in the newspaper: you may have read it Brexit Trying to dismantle City of LondonStatus as a global financial center and a dominant financial center Europe..Or it city Is level pegging with New York as a financial center and is effectively “Brexit-proof”. New Financial, a capital markets think tank, has tracked the fate of global financial centers over the past few years. The latest report reveals that neither argument is true.

Is England By far the largest financial center in Europe Many Greater lead than international European rivals Bank And more financial than other rankings suggest. Overall, over more than 40 activity indicators, the UK is three times as large as France and Germany as a financial center and five times as large as for international business. But … Asian financial centers are catching up rapidly, and UK leads in some sectors have already been hit by Brexit.

What about the global context?

At the world level, the United States is clearly the winner in one horse race. The United States is the world’s top financial center, with 84 out of 100 points, more than double that of the United Kingdom (35), and is by far the largest financial center in terms of absolute value of domestic activities. (17 out of 21 sectors) and international activities (11 out of 21 sectors).

Did you think London and New York were “neck and neck”?

No, it’s not scale. Other rankings in financial centers mainly use qualitative indicators to measure the attractiveness and competitiveness of different cities (is it a good place to live? Local workers are well educated. Have you received? Etc.). We believe that the best measure of the attractiveness of a financial center is where companies choose their place of business. Our index is a rigorous measure of value (amount of transactions made in the UK? What is the value of a French IPO?) To provide more accurate measurements of the relative size of different markets. )Use the.

So is there good news and bad news?

Yes – The “bad” news is that the UK is far behind the United States as a domestic and international financial center, but overall it is in strong second place. Fortunately, Britain is far ahead of its European rivals. As an example, across seven different trading activity measurements for equities, Forex and derivatives, the UK has 15 times more business than its closest European rival, Germany.

How international is the city?

The big difference between the UK and the US, and between the UK and most European financial centers is that the UK is a much more international financial center. As a domestic financial center (UK stock market, UK pension, etc.), it is very small and about the same size as France. But much of the city’s success is that it serves as a crossroads for international business. In the sector where it can be measured, almost half of all banking and financial activity in the UK is international (similar to Hong Kong, just behind Singapore and Luxembourg). In contrast, only 14% of US activity is international, 9% in France and only 3% in China.

How is the competition with Asia?

It’s a mixed picture. China is a huge domestic banking and financial market (the second largest in the world after the United States), but a small international market. The same story is true in Japan. The real competition is between Hong Kong and Singapore, where the domestic market is small but the international sector is growing rapidly. Over the last few years, international activity in Hong Kong and Singapore has grown by about 50%, much faster than in the United Kingdom. Or the world average.

It’s too early to fully measure Brexit’s impact on the UK as a city and financial center (although this index will be able to measure its impact within a few years). Brexit supporters will point to a major lead in international business as evidence that EU financial centers will not soon overtake London (although no one in Paris or Frankfurt has said so).

Critics point out the fact that Britain’s lead in some sectors is already declining. Most of the foreign equity trading has already gone to Amsterdam, with about £ 700 billion of foreign banking assets moving primarily to Frankfurt. Other sectors such as derivative trading, clearing and potentially wealth management are all at risk.

After the referendum, everyone needs to be concerned about the relative stagnation of UK domestic activity. For all 21 sectors, the average increase was exactly 0%, compared to the global average of 16%.

But what about “Global Britain”?

There is no doubt that London and the United Kingdom will continue to be Europe’s dominant and most international financial centers for the foreseeable future. The real challenge is to build partnerships with other markets to minimize the impact of Brexit and to compete in the future with Asia.

William Light is Managing Director of Capital Markets Think Tank New Financial

London remains the leader in the European banking industry, but its rivals are growing rapidly

Source link London remains the leader in the European banking industry, but its rivals are growing rapidly

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