London's Finance Industry

London has been the financial hub of the United Kingdom and a major trade and business centre since the Middle Ages. Today the city competes with New York City for the status of the world's major financial centre.

Other emerging financial centres of the world such as Hong Kong and Shanghai gain ground, but cannot hope to displace London as the world's premier financial city in the near future. English trust laws and strong libel laws attract foreign business. Along with this, the city enjoys a strong advantage thanks to a well-entrenched commercial culture. Businesses may leverage the city's strong networking base and financiers.

Business Districts

Much of London's finance industry is located at the "Square Mile" or the "City," the long standing business hub of London. The other major financial district is the Canary Wharf area, about four kilometres east of the City. Both these financial districts experience growth but restrictive planning policies within the City make Canary Wharf the first choice for most new firms. It is estimated that the financial services sector employs about 315,200 people within the City.

Major Activities

Apart from traditional banking activities and insurance, London also thrives as a centre for foreign exchange and bond trading. The city teems with many trading facilities and trading hubs in foreign exchange, futures, global insurance and bonds. The foreign exchange market has a daily global turnover of about 2.5 trillion GBP. London accounts for about 0.73 trillion or 36.5 percent of the pie. The Bank for International Settlements estimates that London generates 0.88 trillion or 46 percent of daily global revenue in the interest-rate derivative market.

Major Institutions

London has always been the seat of many multinational financial organisations. Some of the major financial institutions currently having their headquarters in London are:

Bank of England
The Bank of England is the UK's central bank. Established in 1694, this is the second oldest central bank in the world and the model on which central banks of other countries base themselves on. The bank was initially privately owned but nationalised in 1946. The bank sets UK's monetary policy, issues bank notes in England and Wales and regulates the issue of bank notes by commercial banks in Scotland and Northern Ireland.

London Stock Exchange
Established in 1801, the London Stock Exchange today enjoys a market capitalization of almost US$4 trillion. This makes it the largest stock exchange in Europe and the fourth largest in the world. The Alternative Investment Market, a subset of the London Stock Exchange, is a stock exchange for small firms. This exchange is relatively less regulated and has no requirements for capitalisation or number of shares issued, providing flexibility to small firms. Established in 1995, this exchange has raised about £24 billion for over 2,200 companies.

London Bullion Market
The London bullion market run by the London Bullion Market Association (LBMA) under the overview of the Bank of England is the world's largest market for the wholesale trading in gold and silver. It finds patronage from almost all major international banks, bullion dealers and refiners all over the world. The average daily turnover is about 18.3 million ounces of gold and 107.6 million ounces of silver.

Lloyd's of London
Lloyds Banking Group is a financial conglomerate traditionally known for its insurance services but also offer retail banking, pensions, insurances and other private services. It has revenues of about £43.5 billion.

The London headquarters of HSBC controls its sprawling network of 7500 strong offices spread across 87 countries. The bank offers personal financial services, commercial banking and private banking on a global scale. The present entity was established in 1991 but its roots trace to the Hong Kong and Shanghai Banking Corporation established in 1865.

Barclays ranks in the list of top ten financial institution of the world. It offers retail, commercial and investment banking and has revenues of about £31 billion.

Standard Chartered
Standard Chartered provides consumer, corporate and institutional banking services. It has revenue of over more than £9.8 billionbillion.

Apart from such household names, London is host to over 500 banks, including 251 foreign banks. A good example is the Frankfurt based Deutsche Bank that employs more than 8,000 people in London. Most of the recent growth in the London financial districts can be attributed to the patronage of international banks.