NYC banking is best in the world
The latest industry report shows New York shares the title of "global financial capital of the world" with London.
So much for the death of Wall Street banks in the wake of the financial crisis. A recent report shows that London no longer is the world leader in finance, with New York gaining ground and sharing top honors with London despite a roller-coaster ride for the industry in late 2009.
Specifically, London lost 15 points while New York gained one point in the biannual survey conducted by Z/Yen Group on behalf of the City of London Corporation -- placing them in a tie for first place. Trailing behind were Hong Kong at #3, Singapore at #4 and Tokyo at #5.
The big slip for London in the annual ranking was due to highly unpopular tax increases on bonuses, which led to an exodus of top talent, and uncertainties about future banking regulation in the region. For instance, hedge fund manager Brevan Howard already has moved to Switzerland from London’s financial district and other investment banks are considering a similar move.
London was one of four global financial centers to lose popularity at the end of 2009, according to Z/Yen. The survey, first offered in 2007, takes into account taxes, office rental costs, availability of talent and transportation, among other factors.
New York basically treaded water in the report, but the sign that the banking industry has not taken quite the hit that London has is good news for the Big Apple. New York lost 10,000 financial services jobs in the 12 months that followed Lehman Bros. collapse in September of 2008 and it really hurt the city’s tax rolls. But now it appears that the banking industry has stabilized and is back in growth mode with the rest of the U.S. economy.
Investors who own bank stocks have already seen this growth. Bank of America (BAC) stock is up more than four-fold since the March 9, 2009, market low. Shares of Citigroup (C) have tripled, and shares of Goldman Sachs (GS) have more than doubled. Though the pace of gains have slowed in recent months, the entire financial industry appears to still be showing strength.
It’s worth noting, however, that the specter of higher taxes and stricter regulations has not altogether passed over the U.S. banking industry in New York. Just today, Democratic Senator Chris Dodd, the chairman of the Senate Banking Committee, made his proposal for reforms in the industry. Regulations include giving shareholders more of a say on executive pay and board of director nominations. While it’s unlikely that any regulations will be as draconian as the measures that undercut London’s financial firms, New York may still see the impact of strict oversight in its future ranking among the world’s financial elite.
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