With large international banking groups rethinking their global strategy and often reducing operations to their core markets, it is interesting to see which financial centres have attracted the largest foreign-owned banking assets.
Unsurprisingly, Hong Kong, one of Asia’s leading financial hubs and the gateway to the booming economy of mainland China, tops the table, with a total of $1358bn in assets owned by foreign banks in the 2011 financial year. It may be more surprising, however, to see the western European centres of Paris and Brussels in second and third place, respectively. Foreign subsidiaries based in Paris registered an aggregate loss of more than $3bn in the past financial year.
Shifting fortunes
The traditional financial centres of London and New York are further down the list, in fourth and seventh places, respectively. With just over $623bn, London’s international bank assets were less than half those of the leader Hong Kong. New York’s assets of $394bn are less than a third of the Far Eastern hub's figure. New York is also registering an aggregate loss of $342m by banks’ foreign subsidiaries based there.
The other financial centre to close 2011 in the red – and a much more significant one – is the Greek capital of Athens, with an aggregate loss of $10.8bn. The city ranks 21st with $128bn of assets owned by foreign banks. Elsewhere in the eurozone, Helsinki has retained its appeal and sits in fifth position, just after London and above Munich, with a total $552bn in assets and just over $2bn in pre-tax profits.
Looking at the most profitable banking centres by size, emerging markets have taken the lead. Moscow shows the highest aggregate return on assets (ROA) with a ratio of 2.68, followed by São Paulo’s 2.08 and Istanbul’s 1.98. Two other Latin American hubs, Santiago and Mexico City, display the fourth and fifth highest returns on assets for their foreign banks. After Istanbul in third place in terms of ROA, the first of any western European or North American centres is found in ninth place. This is Geneva in Switzerland with a ratio of 0.9.
The US cities of Portland (Maine), Wilmington (Delaware), and Providence (Rhode Island) also appear in the table thanks to large international subsidiaries based in these towns. These are Canada’s TD Bank operations in Maine, the UK’s Barclays and Bank of Montreal’s Delaware businesses, and Royal Bank of Scotland’s Rhode Island unit.
