“After 9/11 we became big believers in the need for diversification of our operations, not just people but capital,” explains Donald Monks, BONY senior executive vice-president.

New impetus

Advertisement

The bank was already a global entity when terrorists struck New York’s World Trade Center in 2001 – it has 51 locations in 35 countries – and a major international expansion strategy had been pursued since the late 1990s. But heightened fears about security and concerns about operational risk gave a new impetus to the drive to decentralise and diversify.

The upshot for BONY’s British business, as it was for its operations around the world, was a search for more spokes to circle the central hub – so-called ‘growth centres’ in which to expand and, if necessary, shift operations from elsewhere. The bank’s UK hub is, of course, London, where it has 1500 people working in a Canary Wharf high-rise; there are also smaller operations in Swindon, Edinburgh, Glasgow and Liverpool. Manchester was to be the newest spoke.

“We were very happy in London and in our other locations in Europe, but we wanted to expand,” Mr Monks says. “From our perspective, it was very important to have a diversified labour force in a variety of geographic locations.”

Before deciding on Manchester two years ago, the bank considered two or three other locations in the UK and three or four on the continent (although Mr Monks declines to name the other short-listed cities). Manchester, he says, won out “because of its strong national and international transport infrastructure, well-established financial services sector, and a large pool of talented and motivated individuals at graduate and professional level”.

Foreign presence

This praise fits with the city’s marketing pitch as it makes a push to become, in its words, “the financial and professional services capital of the north of England”. There are already some 60 banks, 20 of them foreign, operating in Manchester; Citigroup and Marsh are among the US financial services companies found there. Nearly 2000 US companies across various sectors have a presence in the area.

Manchester is fully aware that it cannot compete with London head-on, so its strategy is to become first among seconds – to be the obvious choice for companies that either shy away from the capital city or, more plausibly, want to expand beyond there.

“It’s not just about London,” says British consul-general Sir Philip Thomas, who hosted a November cocktail reception at his mid-town Manhattan penthouse to toast Manchester’s financial services success. “Big financial companies are spreading out their operations around the UK.”

If this is the case, as it seems to be, then Manchester probably has as good a shot as any other UK city at capturing London’s financial services overflow (although Glasgow is giving it a run for its money).

Same time zone

At present, BONY has 120 employees in its 90,000-square-foot facility in Manchester but it expects this to grow to 350 in the next few years and 750-odd in the next several years after that. They are primarily support personnel dealing with institutions around the world and staying in constant touch with the London team. For this reason, the bank ideally wanted a location in the same time zone as London and connectivity to both London and international markets. “We are in the business of moving securities for customers worldwide so telecoms capability is key, and Manchester could provide that,” Mr Monks says.

Local officials put together a “respectable” incentives package, Mr Monks says. But that may not have been a determining factor in the decision. “The economic development people [in Manchester] were very clear and upfront about what was available in terms of incentives,” he says. Much more important than tangibles, such as tax credits, was the worker training the city offered to provide. “We feel this is a very meaningful incentive, not only for us but also because it helps the local workforce and economy,” Mr Monks explains.

It was the local workforce that eventually swung it for Manchester, namely the large number of business graduates that local universities pump out each year. “The average worker for us will have two to four years of university education with some finance experience,” Mr Monks says. And he reports of the Manchester hires so far: “We have been very encouraged by the quality of the staff there.”

All about people

Attitude has as much to do with this quality, however, as the workers’ skills base and education. “We’re all about people – we need an enthusiastic group of people who are energetically going about the service of customers,” Mr Monks says.

Although he does not mention it, surely the oft-noted approachability and extroversion of people from northern England, compared with the more reserved southerners, makes that part of the UK particularly well-suited for customer service-focused operations.

The bank’s site selection team was equally impressed with the attitude of Manchester’s economic development professionals. “They have been one of the reasons for the city’s success in securing financial services investment, Mr Monks says, referring to the staff of MIDAS (Manchester’s investment agency) and the Manchester Chamber of Commerce. “They really work well together; that is not always the case.”

Reversing decline

In some respects, Mancunians (natives of the city) have had little choice over the past half-century but to work together if they wanted to reverse the city’s painful post-industrial decline. “It’s been a long journey for those of us in Manchester,” acknowledges Sir Howard Bernstein, chief executive of Manchester City Council.

Coincidentally, clarity of purpose was found in the rubble of a terrorist bomb that destroyed much of the city centre in 1996. “We’ve seen since then a widely respected response to that tragedy and a manifestation of what separates Manchester from other cities,” Sir Howard says proudly. “What we are now trying to portray is a city full of endeavour and full of resilience.”

Businesses, like cities, must be resilient if they are to survive. Ironically, it was BONY’s own search for resilience that led to its investment in Manchester. Like its latest host city, the bank gained new perspective in the aftermath of disaster – and the merits of a business model based on spreading operational risk far and wide, unfortunately, can have only been validated by the bombings in London of July 2005.