London’s appeal as a hub for financial services has been checked, according to a survey of 2,700 professionals, on the relative merits of moneymaking centres.
The UK capital remains at the top of the six-monthly ranking of global financial centres by consultancy Z/Yen, but its ratings fell by more than any other location in the top 25, including New York, Hong Kong and Singapore, which suffered smaller declines.
Mark Yeandle, senior consultant at Z/Yen, said: “People have been ranking London highly in previous surveys because of its reputation, but more recently it’s been damaged by the performance of the economy and reputational issues such as Libor.”
London has led the Global Financial Centres Index since its launch in 2007, despite the turmoil of the banking crisis and problems in the eurozone.
Mark Boleat, policy chairman of the City of London Corporation, the Square Mile’s local authority, played down the decline in London’s ratings. “We don’t detect any feeling in London or about London to suggest that its position is under threat.”
He said that London’s role in banking scandals was being tackled by regulatory action. “What’s happening in terms of Libor fines and so on reflects events that generally happened some years ago.”
Cities in the eurozone such as Paris, Munich, Amsterdam and Milan also suffered declines, with uncertainty in the currency bloc translating into a lack of confidence among finance professionals. Brussels’ rating fell by 44 points, compared with London’s 13-point decline.
Mr Yeandle said some respondents had talked of a “brain drain” from financial centres in the eurozone, with professionals lured to better prospects in Asia or London.
South American centres such as São Paulo and Buenos Aires rose in the rankings, reflecting a growing perception of their importance among financiers. Rio de Janeiro climbed 17 places in the table.
Mr Boleat acknowledged the rise of South American and other emerging market cities but said the survey compared “very different” types of centre. “There are international centres such as London, New York and Singapore and there are those that are predominantly national or regional.” Other sharp risers include Monaco, Malta and Istanbul.
The survey comes as concern simmers in the City of London about Britain’s relationship with the EU. Banks and other institutions in the Square Mile have said David Cameron’s promise of a referendum on UK membership has increased uncertainty in the finance sector.
One London-based executive at a European bank said many in the City had become “complacent” about Britain’s relations with Europe, having assumed the UK would never leave. “But even if it didn’t, the City will still be heavily impacted by European developments like banking union,” the person said.
The UK government this month took legal action against the EU cap on bankers’ bonuses, saying it damages financial stability. Mr Boleat said City institutions shared the government’s concern. “[The cap] ignores the massive amount of work that’s been done by regulators over the past five years to change remuneration practices the world over,” he said.