LONDON ranks alongside New York and Tokyo as one of the world’s three principal financial centres, and is certainly Europe’s leading international centre.  Its publicists dub it "the powerhouse of world finance".

Financial and business services grew 51 per cent between 1982 and 1992, and account for more than 16 per cent of UK Gross Domestic Product.  Net overseas receipts from British financial institutions rose 19.8 per cent from £15.7 billion in 1991 to £18.8 billion in 1992.

The City of London claims the widest range of financial markets in the world, with a flexibility and depth of liquidity brought by the diversity of participating banks, brokers and securities firms attracted to it from abroad.  It also claims the highest levels of expertise and experience, providing great potential for innovation.

The world’s largest centre for bank lending, London hosts some 520 foreign banks and 170 foreign securities houses, between them representing 75 countries.  It has more Japanese banks than anywhere except Japan, more US banks than New York, and twice as many non-European Community banks as Paris and Frankfurt combined.

The Romans encircled the City – "the Square Mile" – with a defence wall after attack by Boadicea, Queen of the Britons, in 61 AD.  Over the subsequent 1,300 years it developed as England’s capital, with a prosperous harbour.  City merchants’ wealth grew over subsequent centuries as England traded further overseas, providing the basis for today’s much sought after financial and market expertise.

Expansion

It was from the City that expansion began in every direction to form what is now greater London.  Today, only 5,500 people actually live in the City itself, compared with 7 million in London overall.  However, 250,000 people commute daily into the City, and all of London accounts for 700,000 jobs in financial and business services.  One in three has a university degree or some other form of higher education.

London facts:

• World’s largest foreign exchange centre, grossing an average of $300 billion per day – one in four of recorded global exchange trades, nine times more than Paris and five times more than Frankfurt.

• 60 per cent of international bond issues.  Well equipped for complex transactions such as market flotations, privatisations, mergers and acquisitions.

• 60 per cent of world-wide turnover in international equities trading outside home markets – including 90 per cent of Europe’s foreign equities trading.  Values traded are double those of nearest rival New York and 60 times greater than in Zurich, Europe’s second largest foreign equities market.

• Europe’s largest stock exchange, ranking only behind New York and NASDAQ (National Association of Securities Dealers Automated Quotations) in turnover and market values of international and domestic equities.  In 1994, 256 new companies raised £11.5 billion through share issues on the LSE (London Stock Exchange).

• The only oil futures exchange in Europe, London acts as the price marker for 65 per cent of the world’s freely-traded crude.

• The London Bullion Markets Association fixes the world gold price twice a day and the silver price once a day.

• The London Metal Exchange is the world’s largest non-ferrous base metals market where trades exceed $1 trillion.

• The London Commodities Exchange is Europe’s largest and the primary centre for soft commodity futures and options.

• Europe’s major centre for exchange traded derivatives.  LIFFE (London International Financial Futures and Options Exchange) with a 17 per cent share of the world market is second only to Chicago.

• World’s most significant insurance centre, with the Institute of London Underwriters, the London Insurance and Reinsurance Market Association and Lloyds, which leads two-thirds of all insurance underwritten in London.  The City’s share of aviation insurance business is double that of the rest of Europe combined.

• World’s maritime capital in terms of marine insurance, ship and cargo broking, arbitration, ship classification and professional consultancy.  The Baltic Exchange, only truly international shipping market, handles half the world’s ship broking business.

• European leader in international institutional portfolio management. with funds of more than £1 trillion, of which a quarter comes from abroad.

• More corporate headquarters than any other city in Europe, hosting 37 per cent of the continent’s 500 largest HQs.  Home of the European Bank for Reconstruction & Development and the European Medicines Evaluation Agency.

• World’s most competitive telecommunications market, more de-regulated than the rest of Europe and making it the continent’s communications hub.  Where the first priority is easy access to markets, the second is cost and quality of communications, which make markets more efficient.  The City is girdled by four fibre-optic "ring-mains", anticipating much faster and clearer communications in ever greater volumes.

History

Older than Parliament itself, the City is packed with history.  The Romans left a Mithraic temple.  The Normans built the Tower of London, next to which stands Tower Bridge, legacy of the Victorians.

Sir Christopher Wren’s St Paul’s Cathedral, miraculous survivor of Hitler’s blitzkrieg, is one of the world’s best known landmarks.  William Shakespeare and John Milton wrote their best work in the City, and that heritage continues in the decade-old Barbican Centre, home of the London Symphony Orchestra and the Royal Shakespeare Company.

Like any market-place, the City relies on gossip, hard news and personal contact.  It is a very "clubby" place with a sophisticated "old boy network" that operates discretely in restaurants, wine bars, clubs and livery halls, the latter reflecting the heritage of ancient guilds begun to foster particular trades, skills and mercantile interests.

It is this same network that thus far has succeeded in maintaining the City’s self-governing status, first granted by charter in 1215 AD.  High point of the City year is the Lord Mayor’s Show in early November when 250,000 spectators line a two-mile route to witness the incoming Lord Mayor of London’s progress in a horse-drawn gilded carriage.  The procession comprises 5,000 people, including 2,000 servicemen and 20 marching bands.  En route, the Lord Mayor stops at the Royal Courts of Justice to swear allegiance to the Queen, and the day finishes with a firework spectacular on the River Thames.

The Royal Courts deal with Civil matters, while Criminal trials take place at the Central Criminal Court – the Old Bailey – 10 minutes away.  Nearby are the four Inns of Court, housing barristers (advocates) in secluded chambers, often with an "other-century" atmosphere, redolent of the system’s medieval and monastic origins.

The same area was until recently the home of Britain’s national newspaper industry, many of them on Fleet Street.  The newspapers are today based further afield in modern premises, thanks to the coming of computers and other new technology that have revolutionised the newspaper publishing and financial industries.

Rivalries

A key part of the national newspaper tradition has been to maintain "City offices" even closer to the heart of the financial centre than nearby Fleet Street itself.  These bureaux operate with virtual autonomy, and they are staffed by specialist journalists who concentrate entirely on areas such as the stock market, banking and the economy.  They know the City and its workings and people inside out, and what they write is taken for gospel.  It can make or mar markets and individual stocks or reputations.

The financial pages thus produced every day enjoy great "market sensitivity", and so are no-go areas, even for the most-domineering of newspaper editors and proprietors.  City editors and their writers are almost a law unto themselves, and have their own network of rivalries and relationships which inter-weave with all the other complex of networks that make the City tick.

Also crucial among those networks are stock market analysts, employed by every broking firm worth its salt.  Their function is to advise investors – their employers’ clients – on the prospects of companies, many already listed in the market and others seeking a new listing.  Usually highly-qualified – and better groomed than the journalists – they follow a similar hectic lifestyle and routine, absorbing and interpreting complex information in a hurry.  They attend briefings by company chairmen and directors, asking sharp questions about details of interim and final accounts.

They too can make or mar a stock or a personal reputation.  So, like City journalists, they are courted assiduously by specialists in a highly-specialised world.

1363 words Copyright © Anthony Howard