In The Banker's ranking of the world’s international financial centres, London continues to lead over close rival New York, but competitors from China and Japan are rising through the ranks.
For better or for worse, London continues to generate much international attention around its financial centre. The debate over a possible UK exit from the EU is very much alive, with a referendum on the matter likely to take place in 2016. The news of the UK government starting the sale of Royal Bank of Scotland, which it was forced to rescue during the financial crisis, attracted as much criticism as it did praise. And the first conviction in the Libor rigging affair was delivered in a London court, bringing the scandal nearer to closure but also providing a reminder of which city stood at the epicentre.
But away from these headline-grabbing developments, looking closer to figures and data, London continues to reign as the world’s leading international financial centre (IFC). The Banker has analysed a number of leading IFCs and has crunched numbers reflecting macroeconomic factors, size of financial markets, appeal to international investors and ease of doing business, among many others. In our latest list, new data on numbers of financial services firms present in the 56 hubs studied was introduced to better capture the support network that each IFC has developed over the years. London scores well in this respect. It hosts the third largest community of such firms after São Paulo and Amsterdam, according to data provider Dun and Bradstreet: 44,373 between depository institutions, brokers, insurance agents and others.
More impressively, London continues to attract as well as generate the largest numbers of foreign direct investment projects of any city in the world: 390 and 870, respectively, for the five years to the end of 2014, according to greenfield investment database fDi Markets. It has also surpassed Singapore – first in this area in last year’s ranking – as the easiest environment in which to conduct businesses, based on speed to register and start a business, register a property, enforce a contract as well as number of international destinations served from the city.
East Asian rise
Also of note is the performance of Japanese and Chinese hubs. In fifth place after London, New York, Singapore and Hong Kong, Tokyo has moved up three positions in the ranking, mainly thanks to the higher stock market capitalisation of its bourse. Beijing climbed the ranking on the wave of exceptional banking results, while the growth of Shanghai’s stock market, as well as its banks’ profits, gave the IFC an even bigger push – Shanghai has now surpassed Beijing in the ranking and sits in 16th place. As concerns over equity valuations emerged earlier this year, however, Shanghai’s upward trend may change in the future.
New York continues to dominate when it comes to financial markets indicators that take into consideration the size, depth and level of internationalisation of an IFC's markets.
Europe’s second best scoring IFC after London is Amsterdam – a financial hub that serves large numbers of financial services firms, but also scores particularly well in terms of value of international debt securities issued. In North America, Toronto is the best performer after New York, while the Latin American crown goes to São Paulo.
The Cayman Islands leads the specialised centres list, where the top five positions remain unchanged from the 2014 ranking. A few moves affect the table further down, with Bermuda and Gibraltar climbing up one place to sixth and ninth, respectively, and the Turks and Caicos Islands moving upwards by three positions.
Methodology
The Banker’s ranking of IFCs is based on data ranging from financial markets indicators to economic potential to business environment factors. The ranking focuses on the level of international business and the value offered to institutions seeking to expand their international operations.
In recognition of the fact that data for specialised financial centres is seldom consistent with that for mainland financial centres, The Banker has surveyed each specialised IFC and has compiled a separate table using information relevant to these locations. Publicly available data sources were used as well as The Banker Database and fDi Markets.
