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March 25, 2013 12:00 am
London remains at the top of the league of global financial centres but overseas hubs are closing the gap, research has found.
In a survey of 2,300 finance professionals, London was judged the most competitive financial centre, followed in the ranking by New York, Hong Kong and Singapore.
But several European cities, such as Paris, Zurich and Geneva, saw higher year-on-year increases than London. Frankfurt broke into the top 10 for the first time in the history of the twice-yearly survey by think-tank Z/Yen.
Mark Boleat, policy chairman of the City of London Corporation, said Frankfurt was increasingly seen as the headquarters of the eurozone. But he played down its attractions for the financial services sector. “We haven’t heard anybody talking about business moving there,” he said. “It’s not a place that many Chinese, American or Japanese banks are keen on placing business in.”
London’s ratings appeared unaffected by the Libor manipulation scandal, which broke last summer and has triggered record fines for the banks involved. In fact, respondents cited “rule of law” as one of the city’s main attractions.
Mark Yeandle, senior consultant at Z/Yen, said that while Libor rate-rigging first came to light in London it had subsequently been exposed as a global problem. “The way it was treated in London – quickly and seriously – may have counter-intuitively shored up the city’s reputation for tackling this kind of behaviour.”
The city’s allure may appear undented, but the survey was conducted before the European parliament succeeded in capping bankers’ bonuses at twice annual salary with shareholder approval – a radical move that has sparked questions over its future competitiveness.
Mr Boleat said the bonus cap was “not helpful”. “At the margin, it makes London less attractive for some businesses and people. While most businesses will restructure to get around it, it sends the wrong signal about London.”
Scores among the Asian centres in the latest survey rose, reversing unexpected declines six months ago in the ratings of Hong Kong, Singapore, Shanghai, Tokyo and Shenzhen.
Among the two leaders, Singapore has closed fast on Hong Kong, the traditional regional leader, with the pair now separated by only two points. Respondents said quality of life and lack of corruption were factors that had boosted Singapore, which has seen an influx of expat American and British professionals in recent years.
Mr Boleat said Singapore had been making direct overtures to businesses with branches in London since Brussels’ move to rein in the banking sector. “Singapore is regarded as a significant competitor,” he said. “It has the advantage of being a city state where they have the powers to do things quickly.”
Another trend apparent in the survey is the rise of Canada as a venue for financial services. Toronto, Vancouver, Calgary and Montreal, where the Global Financial Centres Index is officially launched on Monday, all appear in the top 20, having trailed in the rankings five years ago.
“Toronto and Montreal are genuinely world class,” Mr Yeandle said. The view that Canada had performed well during the financial crisis, he said, was borne out by the recruitment of its central banker, Mark Carney, as the next governor of the Bank of England.
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