CENTRES OF GRAVITY
November 13, 2009
I was interested in the reporting of the appearance by my friend and regular collaborator Jeremy Peat, at the Holyrood Banking Inquiry. I think his comments need to be seen in a wider context.
The City of London is the largest financial centre in the world and is, in global terms, without doubt a - if not the - centre of gravity. RBS and HBOS for many years have had large numbers of staff working in London, in areas like capital markets, currency trading and investment banking. So it is important to recognise that wherever the HQ is, a lot of activities take place where the financial markets are concentrated.
There is more than one kind of gravity in financial services. If you want to raise money from investors, Scotland (and especially Edinburgh) is on your list of places to go, with London, Frankfurt, Geneva and a few other cities in Europe. Only this morning, I participated in a forum to discuss how Chinese companies could benefit from investments by Scottish fund managers. Our fund management industry (that is, the business of investing on behalf of others) is a centre of gravity in its own right, making decisions here that influence the workings of economies and markets worldwide.
Our asset servicing sector (that is, the business of executing and valuing the myriad of international financial transactions that daily take place) is also doing well. Companies like BNP Paribas, JP Morgan, HSBC, State Street, Morgan Stanley and Citi are running very successful operations here and this kind of high quality, international, sophisticated work is in my view a big part of our future.
Recent announcements by Lloyds Banking Group (who have 20% of all senior managers, and almost 70% of their insurance division executives based in Scotland) and RBS have brought further clarity to their plans. Both companies have been very clear about their commitment to Scotland so they, too, are a big part of our future. And Tesco Bank is now firmly established as an Edinburgh-headquartered company with a bright future of its own (not to mention the 800 new jobs Tesco Bank has announced for Glasgow).
Jeremy is clearly right to say that what has happened at these banks will have an impact on Scotland's professional services, as corporate work previously undertaken here declines. Some companies that operate internationally are responding to that by exporting the skills they have in Scotland to other markets; but the challenge of maintaining the full range of services, which is important to our attractiveness as a place to do business, is certainly there. But I don't think it is beyond us to meet it.
Owen
