Financial Services Review of the Year: 2008

Scotland’s status as a global financial centre has not been diminished despite the economic turmoil seen throughout the world in 2008. Scotland’s breadth and depth of financial services companies, from Morgan Stanley, J.P. Morgan, BNP Paribas and Barclay’s Wealth, to hundreds of smaller boutique operations, have stood it in good stead to weather the turndown’s worst affects.

The merger of insurance giants Resolution and Pearl had good results for Scotland where £55 billion of the new groups' funds are controlled from Glasgow and securing 400 jobs.

Nevertheless, many Scottish-based companies increased profits during the year as well as launching expansion plans.

Profits at Standard Life Investments rose by 55 per cent for 2007/08, following what the company called a "good investment performance”, and Scottish Widows Bank, the internet and telephone based mortgage and deposits bank, reported profits before tax of £30.4m for the year - a 5.3% increase on 2006 “reflecting the underlying strength of the business”.

Insurance company AEGON UK also announced new business growth and a 27% increase in profitability for 2007, making it another record year of business performance.

Fund manager Martin Currie reported another year of impressive growth with a 60 per cent rise in pre-tax profit to £25.6m and an 18 per cent growth in funds to £15.7bn.

“We are still hiring people and have no plans to cut jobs.”

said chief executive Willie Watt.

Another company looking to expand it staff is BNP Paribas Securities Services which has selected Glasgow and Dundee to pilot an innovative two-year “Accelerated Growth Programme” for graduates.

Expansion plans were not only restricted to Scotland as Aberdeen Asset Management (AAM) unveiled a bold move into the potentially lucrative Japanese market. It signed a deal with the country's largest bank, Mitsubishi UFJ Financial, which will take a 10 per cent stake in the Scottish company, as AAM looks to secure a proportion of $30 billion worth of investment business in Japan.

Another company with its sights on the Far East is Edinburgh-based Scottish Widows Investment Partnership which is planning to launch a commercial property fund in China over the next two years.

Several independent reports also highlighted Scotland’s business robustness, citing developments in Edinburgh and Glasgow that augur well for the future.

Scotland was named as the European Region of the Future 2008 for the second time in four years by the Financial Times fDi (Foreign Direct Investment) magazine, beating 38 other European Regions for the title. It is also currently the UK Region of the Future 2007, and Europe’s Region with the best Human Resources.

Scotland’s economic performance, human resources, IT and telecommunications, transport links, quality of life and overall FDI promotion strategy were praised.

Edinburgh, Glasgow and Scotland as a whole also featured in the top ten ‘Most Business Friendly’ cities or regions in Europe.

The latest Global Financial Centres Index (GFCI) report from the City of London Corporation showed that Edinburgh, the world's 18th biggest financial centre, had improved its standing and made up ground on the established top ten cities including London, Hong Kong, Geneva and Frankfurt.

And investment in the city of Glasgow reached a new all-time high levels with increased confidence in the office and business sector.
Almost £4.7 billion of investment are going into citywide projects, an 11% increase over the equivalent figure for the previous year.

Glasgow’s International Financial Services District (IFSD) is an example of this development and now has 14,000 people working within it and is well on target to achieve its aim of providing 20,000 jobs by 2011.

The IFSD has attracted companies such as US financial giant Morgan Stanley, J.P. Morgan, First Data, BNP Paribas, ACE Insurance, Barclays Wealth, moneyQuest, Direct Line and esure Insurance.

All this activity has resulted in soaring salaries for Scotland's financial services sector. New research showed wages went up by 11.4 per cent between March 2007 and March 2008.

Those figures are in contrast to below inflation average rises seen in London of 2.7% and across the UK of 4%.