The UK is a services-based economy and nowhere does it excel more than in financial services, thanks mainly to London’s position as one of the most important – many would argue the leading – international financial centres in the world.

Activity is not restricted to the capital, however. In 2005 there was £17bn-worth of deal activity in the north of England; that same year the Northwest overtook London in its number of management buy-outs and posted a deal value of £12.8bn. The region’s financial and professional services sector generates £7.3bn in annual income, employing 280,000 people.


Most of the UK’s other main cities position themselves as suitable alternatives to a crowded and expensive London. Some claims are more tenable than others; but each has something to offer even if not the whole package.

None of the regional centres can challenge London’s supremacy, but that is not really the point. At a time when having most of your UK functions and staff sitting in one high-rise block in Canary Wharf is not the best idea from either a risk management or a cost-saving perspective, there is scope for financial services development in many parts of the country.

Dual centres

Many companies have found that establishing dual operations in London and elsewhere in the UK allows them to maximise cost and operational efficiency while spreading risk.

More than one location lays claim to having the largest financial services cluster outside London; which one actually does depends largely on the criteria and measurements used.

Marketing-savvy Manchester, with its clever economic developers and slick city branding, is a vocal, visible and viable contender. “Leeds has been better at promoting itself,” acknowledges Malcolm Gresty, director of business development at Manchester’s investment agency MIDAS, “but that story is out of date”.

Manchester, which is none too shabby at self-promotion, has been actively telling a new story. But it is more than spin – the numbers do stack up, especially when it comes to deal volume. In 2005, the Manchester metropolitan region’s accountancy and finance firms touched nearly half of all AIM flotations; law firm Halliwells, named AIM Lawyer of the Year 2005, is headquartered in the city.

Manchester’s financial services foreign investors include AIG, The Bank of New York, Kleinwort Benson Private Bank and the State Bank of India. There are some 60 banks operating in greater Manchester, a third of them foreign-owned, according to MIDAS.

“It’s a tough market out there, but the Manchester offer is a good one,” says MIDAS chairman Michael Oglesby.

But Manchester wants to be more than just London’s number two: it places itself in the European league.

“We don’t see Leeds, Glasgow or Birmingham as competition. More and more we are competing with European locations for high-end back-office projects, such as Barcelona, Stuttgart and Frankfurt. Singapore and Dubai are also starting to feature and set up financial and professional services centres,” says Mr Gresty.

Leeds makes it big

Leeds, however, believes it is the UK’s leading financial services centre outside London. In February 2007, city officials trumpeted the UK government’s latest Annual Business Inquiry, which showed Leeds as having the largest number of people employed in financial and business services of any city apart from London. According to the report, Leeds, with 109,060 such employees, overtook Birmingham for the first time, and surpasses Glasgow, Edinburgh and Manchester.

But, again, this is a matter of how the data are sliced and how the geographical boundaries are drawn. Manchester, for example, is a much larger metropolis with a much wider catchment area than the employment figure of 82,779 cited in the report reflects.

Historically a hub for credit unions, Leeds is home to more than 30 national and international banks, many using the city as their regional or northern hubs, or, in the case of First Direct, as corporate headquarters. The Bank of England has an agency and its only note-issuing centre outside London in Leeds. The city hosts large operations of Halifax Bank of Scotland (HBOS) and all the main clearing banks, as well as private and investment banks and a smattering of foreign banks.

Leeds has long been an important outpost for the UK insurance market, hosting the head offices of UKI Partnerships and sizeable operations for Direct Line, Privilege Insurance and Halifax Insurance Services.

Birmingham, the regional capital of the West Midlands, also boasts that its financial and professional services sector is second only to London’s. The sector is undeniably a crucial part of Birmingham’s economy: financial and business services account for 23.2% of city employment and 25.4% of output, according to 2005 data.

Employment and output in the sector have been increased their share by about 10% since 1981, with a total of 40,000 new jobs, compared with 9% nationally. Since the mid 1990s, the sector has been the main driver of economic and employment growth in the city. Despite signs that this growth pattern has started to level off, economic development officials still expect to add more than 20,000 financial and professional services jobs over the next decade.

All the major UK banks and 30 overseas banks are present in Birmingham, as are more than 100 law firms and the largest barristers’ chambers in the country. Many of the major accounting firms have their largest offices outside London in Birmingham. The insurance sector is strongly represented, and there is a wide range of other specialist sectors, including actuaries, architects, patent attorneys, and executive search and selection services.

Commuting home


Closer to London, the south-eastern county of Kent sends an army of commuters to the capital each day, but the local presence of such companies as Fidelity Investment Services, Vanquis Bank, RMB International, Man Group, Saga Financial Services and Jupiter Unit Trust Managers provide reasons for some of the 16,000 or so financial services professionals residing in Kent to work closer to home. The county is billing itself as a prime location for the administrative centres of financial institutions.

Meanwhile, in south-west England, financial and business services companies account for roughly a quarter of the region’s economic production, eclipsing the bedrock industries of shipbuilding and farming. The traditional trading port city of Bristol counts among its inward investors Lloyds TSB, which employs more than 4000 people, and Bank of Ireland, which acquired the Bristol & West building society.

Admiral Insurance Co, valued at more than £2bn, reportedly received £1m in grants to locate in Wales in 1991 and now employs 2000 people in Cardiff and Swansea. That investment, and the company’s subsequent reinvestments, helped catch the eye of the UK financial services industry and served to kick-start the sector in Wales.

Financial services is one of the five priority sectors targeted by Wales. The past five or six years has seen a shift in strategy to a stronger focus on financial services, says Tony Godfrey, who looks after financial services for International Business Wales, the trade and investment promotion arm of the Welsh government. The shift is one that has paid dividends.

“There were only two indigenous financial services companies, excluding brokering – Julian Hodge Bank and Principality Building Society – so the Welsh financial services sector has grown on the back of inward investment,” he says. Most of the activity is along the ‘M4 corridor’, encompassing Cardiff, Swansea and Newport. Most recently, Clode Retail Finance (CRF), the UK’s largest independent provider of retail finance to consumers, which has been in Cardiff for more than four decades, announced plans to more than double its workforce in the Welsh capital with the creation of 41 new specialist jobs over the next two years.

CRF managing director Nick Davies says: “There is an excellent source of motivated, trained staff available in the financial services sector in Cardiff, which also has good transport links and supportive private and public business community.”

In Cardiff, the Callaghan Square development is seeking to be the hub of the city’s financial services industry and providing posh new digs for growing companies with the construction of three high-spec buildings offering 50,000 square metres of office space. One of the buildings will be ready by this summer, and the other two in January 2008. This development phase follows successful lettings to Eversheds Solicitors, ING Direct and Allied Irish Bank. In Wales, says Mr Godfrey, “there is plenty of space and appetite for financial services investment”.

NI branches out

Buoyed by some big BPO and customer service centre project wins, Northern Ireland is branching out into other financial services activities. As it stands now, the industry employs more than 20,000 people in more than 1200 companies across the region, in such sub-sectors as investment banking, financial administration, trading, mortgage and insurance services and software development.

International financial services companies to have established operations in Northern Ireland include The Allstate Corporation, Liberty Mutual and Danske Bank as well as Halifax (HBOS), Abbey (Banco Santander), and Bank of Ireland.

In 2005, Citigroup established a technology ‘centre of excellence’ in Belfast to provide applications development and technology infrastructure support for its corporate and investment bank. Since then the operation has grown, and the US bank made an announcement in January that it would be expanding further to create 117 jobs for a new operations division in 2007. This will bring Citi’s total employment in Belfast to about 600 over the next two years.

Scottish heavyweights

The Scottish cities of Edinburgh and Glasgow – so close in mileage and yet so far apart in atmosphere – pack a heavy one-two punch. More than that of any other part of the UK, save for the City of London, Scotland’s financial services industry has a distinct brand and global clout. Led by Edinburgh, Scotland has become a global centre for fund management: more than £300bn funds are managed directly in Scotland. “We do not regard ourselves as a satellite to London but as a prominent financial centre in our own right,” says John Carmichael of Scottish Enterprise’s financial services team. “We punch way above our weight in this particular sector.”

The Global Financial Centres Index, a benchmark produced by Z/Yen Group on behalf of the City of London and released in March 2007, puts Edinburgh 15th worldwide. It is the only UK city apart from London (at number one) included in the ranking of the top 46 global financial centres. On the GFCI’s ranking of city brands, Edinburgh comes in at number 18, ahead of such cities as Tokyo, Hong Kong, Singapore and Moscow.

Scotland can boast not only its two flagship cities but the global headquarters of two of Europe’s top 10 banks, The Royal Bank of Scotland and HBOS.

RBS, the world’s ninth largest bank by market capitalisation, is Scotland’s greatest trump card. Founded in 1727, the bank has grown from a “strong but very boring regional banking group”, as head of communications Carolyn McAdam puts it, into a global player with more than 140,000 employees, 35 million customers worldwide and total assets of £777bn as of December 31, 2005. “We’ve had a fantastic 25 years as a group and we are very proud that we have done that from a base in Scotland,” she adds.

Corporate campus

And if ever there were a symbol of what sets apart the Scottish financial services sector it is the jaw-dropping RBS corporate campus at Gogarburn outside Edinburgh, opened by Queen Elizabeth II in September 2005. More than 3200 employees work at the 100-acre site, which includes, among other amenities, a leisure centre, a 20 metre swimming pool, a beauty spa and sauna, a day care centre, jogging trails and football pitches that convert into tennis courts. There is also a 500-seat restaurant, a conference centre with a 300-seat auditorium, banqueting space for a 200-head sit-down dinner, and residential executive training facilities that board 70 people.

“This campus is about positioning us as an employer of choice and persuading people that we are not a two-bit organisation to come and work for. It also shows existing employees the level of confidence we have in ourselves,” says Ms McAdam.

The bank is not just a boon to Scotland, though. As a stated policy, all its call centres are located within the UK, and the bank is a major inward investor for various UK cities with financial services aspirations of their own – among them rivals to Edinburgh and Glasgow, such as Liverpool and Manchester.

Scotland’s Finance Sector: ‘Confident but not complacent’