Much attention is given to how appealing international financial centres (IFCs) are to foreign investors, and how much direct investment they attract from abroad. But to get a fuller picture on their relevance in the world’s financial markets and economy, it is also important to look at their ability to originate – rather than capture – international investments.
As to be expected, given their size and international relevance, London and New York top the IFCs list by outflows of foreign direct investment (FDI) into other hubs’ financial sectors between April 2011 and March this year, with $4.85bn and $2.94bn generated, respectively.
But other jurisdictions have been scoring well and have improved their standing in the list. Toronto is the prime example, having moved to third place from 19th in the space of a year. The Canadian city generated more than $1.7bn between 48 projects, compared with just $439m and 20 projects in the 12 months from April 2010 to March 2011. The same impressive improvement – a jump of 16 positions – was displayed by Sydney, now in 14th place from 30th last year.
Spanish expansion
The highest single investment with a disclosed capital expenditure (as opposed to estimated figures) was directed from Madrid to the UK thanks to Santander’s £200m ($316m) expansion at its site in the city of Leicester, where the bank had planned to move its UK computing operations and which will include the construction of two new buildings. The deal was announced in May 2011 and is to be completed by 2014. In February this year, Santander also announced the creation of a £100m data centre in Narborough, near Leicester, which will create 60 new jobs.
The project with the highest number of new jobs created was Toronto-based TD Bank’s expansion in Greenville, South Carolina, where it will establish its US headquarters. The project will create more than 1400 new positions by 2016.
Data provider fDi Markets identified a total of 41 IFCs that generated international direct investments over the 12 months to this year’s first quarter, compared with 47 financial hubs for the same period the previous year. However, total outflow FDI numbers were not too dissimilar between the two periods, with $27.48bn of capital expenditure generated for the 12 months up to the first quarter of 2012, compared with $30.89bn in the 12 months up to the first quarter of 2011. The lower total value was a consequence of a contraction in outflow investments from the top 15 centres of the ranking. These recorded a total of $20.64bn, compared with $24.47bn in the previous time period.
