LONDON IS AND WILL REMAIN A GLOBAL FINANCIAL POWERHOUSE

London is the world’s leading centre for financial services. In a recent survey it was ranked as having the most impressive infrastructure, the best business environment, the best reputation and the greatest human capital in the world.

Financial services are a vital pillar in the UK’s economy, contributing more than £65 billion in taxes to the Treasury every year — 11 per cent of total government receipts. More importantly, financial and professional services support more than 2.1 million jobs — 7.2 per cent of all UK workers. Many of these jobs are European-focused, as London is the pre-eminent financial and professional services hub in Europe. This makes these jobs particularly vulnerable to any loss of access to the European Single Market of 500 million people, the largest in the world.  

One thing is certain: there will be no mass exodus of banks and financial institutions from London. They will not rush to take decisions and they will seek to do any restructuring in a way that minimises disruption. And it is certain that banks will continue to maintain a major presence in London.

While some industries will be adversely affected by the decision to leave the EU, there is no reason why London can’t maintain its position as a world leader in financial technology, foreign exchange and professional services. 

The referendum may indeed serve as a catalyst to develop some new, innovative industries in London through expanded interaction with growing economies such as India and China, and forging trade links with countries where growth will lie in the future, such as Indonesia, Mexico and Nigeria. 

No European city other than London comes close to having the essential characteristics of a truly global financial center. And this will remain the case for the foreseeable future.

It seems highly unlikely that Brexit alone would lead to any EU nation emerging as an obvious place for global finance to migrate from London. Even if officials eyeing a piece of the action make policy tweaks to try to create a more favorable financial services environment, some of the most basic pieces of the puzzle would still be missing.

For starters, there’s the size issue, which, in turn, affects many of the infrastructure and human capital factors. London’s population is about four times that of Paris’s: 8.5 million to 2.2 million, respectively. London has some 350,000 to 400,000 financial services workers at present; that is close to the entire working population of Frankfurt, a city with only about 700,000 people in total. All of the major financial centers in Europe (other than London) are a suitable size to be strong regional or specialist hubs but not global powerhouses.

It’s not just about size: it’s about business environment, financial sector development, infrastructure, human capital, and reputational and general factors. London regularly tops all or most of these categories. The most important categories, according to the thousands of professionals surveyed, are business environment (particularly regulation) and human capital (in particular the ability to attract skilled people). New York, Singapore, and Hong Kong are also strong in these factors. Global finance houses are unlikely to choose to move people to centers based in EU countries unless they absolutely need to. These businesses tend to look on the employment laws in countries such as Germany and, especially, France as restrictive — even draconian. Paris in particular is likely to make finance houses nervous, so long as the noises coming from the Élysée Palace keep giving the impression that the French government would happily tax and regulate financial services out of existence if it could.

Once the UK  leaves the EU it is very difficult to imagine EU leaders granting London  the right to provide cross-border services, known as passporting rights. Why would they? Why should they?

However, it is also likely that the instability and uncertainty that would affect London adversely would also affect other EU-based centers, too. It will take years for the details of Britain’s exit to be hashed out. In the meantime, there are likely to be anti-EU insurgency campaigns in other European countries — potential Swexist and Frexits and the like — that gain strength on the back of a Brexit, leading to additional instability. The downsides of this uncertainty, for most if not all European centers, would almost certainly outweigh any scraps of business those cities might pick up from London.

Global finance (and thus the role of the financial centers that support it) is not a zero-sum game. In times of stability and economic strength, most financial centers can thrive. In times of excessive uncertainty and stagnation, most will suffer, some more and some less. If anyone is poised to take advantage of Brexit, it is the cities that are already well established as London’s looming competition. No, not New York — though it would probably, in the medium term, benefit from the euro’s instability compared with the dollar and London’s relative uncertainties. The cities with the most to gain are the Asian financial centers. Hong Kong, Singapore, and Tokyo — even Seoul and Shanghai — already have the scale and infrastructure to grow as global financial centers. Such a shift to Asia will boost the fortunes of American and Asian centers at the expense of European ones, in a way that, again, will far outweigh any modest gains to be had as a result of Britain’s departure from the EU.

Investment Banks in the UK

1. ABN Amro (merged with RBS)
2. ABC Corporation 
3. Allen and Company 
4. Alliance Bernstein 
5. Allianz 
6. Arma Partners
7. Aviv Investors
8. Baillie Gifford
9. Bank of America Merrill-Lynch (staff: 8000)
10. Barclays 
11. Bank of China 
12. BOCOM
13. BB&T Capital Markets
14. BBVA
15. BBY Ltd
16. BlackRock
17. BMO
18. BNP Paribas (staff: 2500) 
19. Boenning & Scattergood
20. Brewin Dolphin
21. Brown Brothers Harriman
22. Brown, Shipley & Co
23. BTG Pactual
24. Cain Brothers
25. Cannacord Financial
26. Cantor Fitzgerald
27. Capstone Partners
28. CCB
29. CenterviewPartners
30. Cheyne Capital
31. CIBC
32. China International Capital Corporation 
33. Citi (staff: 7000)
34. Citigroup
35. CITIC Securities
36. Close Brothers Group
37. CLSA
38. Commerzbank 
39. Corporate Finance Associates
40. Cowen Group Inc.
41. Crédit Agricole 
42. Credit Suisse (staff: 5000) 
43. C.W. Downer & Co
44. D.A. Davidson & Co.
45. Daewoo Securities 
46. Defoe Fournier & Cie.
47. Deka Bank
48. Deutsche Bank (staff: 7000) 
49. Duff & Phelps
50. Europa Partners
51. FBR Capital Markets
52. Fidelity International
53. Financo Inc.
54. Finnburg Switzerland
55. Foros Group
56. Friedman Billings Ramsey
57. Gleacher & Co
58. Goldman Sachs (staff: 5500) 
59. Grace Matthews
60. Greenhill & Company
61. Greif & Co
62. Grupo Santander
63. Guggenheim Partners
64. Guosen Securities
65. Harris Williams & Company
66. Hilco Corporate Finance, LLC
67. Houlihan Lokey & Zukin
68. HSBC (staff: 5000) 
69. ICAP
70. ICBC
71. Imperial Capital, LLC
72. ING Group
73. Investec
74. Investment Technology Group
75. Janney Montgomery Scott
76. Jefferies & Co.
77. Jordan, Knauff & Co.
78. JPMorgan (staff: 8000)
79. KBC Bank
80. Keefe, Bruyette & Woods
81. KeyCorp
82. Kleinwort Benson
83. Kotak Mahindra Bank
84. Ladenburg Thalmann
85. Lazard
86. Lazard Capital Markets
87. Legg Mason
88. Locstein Group
89. M&G Investments
90. Macquarie
91. Man Group
92. Marathon Capital
93. Marshall Wace
94. Martin Currie Investment Management
95. Mediobanca
96. Miller Buckfire
97. Mitsubishi UFJ Financial Group
98. Mizuho Financial Group
99. M.M. Warburg & Co
100. Moelis & Company
101. Monte Paschi di Siena
102. Montgomery & Co.
103. Morgan Keegan & Company
104. Morgan Stanley (staff: 5000)
105. M&T Bank
106. Natixis
107. Needham & Company
108. Neuberger Berman LLC
109. Newbury Piret
110. Newedge
111. Newsouth Capital Inc.
112. NIBC
113. Noble Bank
114. Nomura (staff: 2600) 
115. Nomura Securities Co. Ltd 
116. Oppenheimer
117. Panmure Gordon
118. Park Lane Investment Banking
119. Perella Weinberg Partners
120. Pete J. Solomon Company
121. Piper Jaffray
122. PNC Group
123. Pottinger
124. Rabobank]
125. Raymond James
126. Robert W. Baird & Co
127. Rothschild
128. Royal Bank of Canada 
129. Royal Bank of Sotland (RBS) (staff: 2000) 
130. Rutberg & Co
131. Sagent Advisors
132. Sberbank 
133. SBI
134. Salman Partners Inc.
135. Sandler O’Neill
136. Sanford Bernstein
137. Sanlam
138. Saxo Bank
139. Scotiabank
140. Schroders
141. Seymour Pierce
142. Société Générale (staff 2800)
143. Standard Bank
144. Standard Chartered Bank
145. Stephens Inc.
146. Stifel Financial
147. Stone Key Partners
148. SunTrust
149. T.Rowe Price
150. ThinkEquity Partners, LLC
151. Thomas Weisel Partners
152. Tibra
153. Toronto-Dominion Bank
154. Towers Watson
155. TSG Partners, LLC
156. UBS (staff: 4000)
157. Unicredit (staff: 800)
158. Vermilion Pertners
159. Viant Group
160. Wachovia
161. Wasserstein Perella
162. Wedbush Securities
163. Wells Fargo
164. William Blair & Company
165. WR Hambrecht+Co