A new report from the British Banking Association (BBA) and consultancy firm Oliver Wyman, has warned that London is losing its edge as an international banking centre and said that “urgent action is needed if the UK is to remain an attractive location for foreign banks.”
The BBA warns that London risks losing out to other financial cities such as New York, Hong Kong and Singapore and according to the report, the UK needs to provide a competitive business environment for UK wholesale banks to challenge overseas.
The report found that the amount of assets in the UK banking sector have fallen, compared to a rise in growth of up to 34 per cent seen by the other cities such as Hong Kong. The UK, which has suffered a 12 per cent fall since 2011, is being outdone by the US which saw a 12 per cent rise and Singapore’s assets grew by 24 per cent in the in the same period.
“We have now reached a watershed moment in Britain’s competitiveness as an international banking centre,” BBA Chief Executive Officer Anthony Browne said in the report. “Many international banks have been moving jobs overseas or deciding not to invest in the U.K.”
The report, which was compiled to assess the industry’s competiveness, identified eight key threats to the banking industry in Britain, including domestic and EU-wide regulation, and former Financial Services Authority chief executive set out over 23 recommendations for regulators and the government.
Recommendations made include identifying the bank surcharge as a transitional measure and ringfencing regulations to inflation-proof current thresholds in order to protect smaller banks, alongside suggestions for the government to set up a new body chaired by the Chancellor of the Exchequer, which would be responsible for ensuring the delivery of the policy for international banking and overseeing regulators and the regulatory approach across the government, in a bid to reduce excessive regulations and help international banks to thrive in London.
The BBA said that financial services is the UK’s biggest export industry selling 62 billion pounds every year and employing over 400,000 people, however, according to the report, the UK has also seen 35,000 job losses compared to rival countries and London is also losing market share in lending and initial public offerings.