LOCATION Kyiv-Mohyla Academy, Kyiv, Ukraine

SPEAKER The Lord Mayor of the City of London, Alderman Ian Luder

DATE 04/09/2009

Ladies and Gentlemen

It is a great honour to have been invited to speak at the historic National University of Kyiv Mohyla Academy.

I am the Lord Mayor of London; Lord Mayors are elected every year and our main role today is ambassador for all UK based financial and professional services, from Accountancy to Banking, Insurance and Law. The job has taken me all over the world with business delegations to talk about doing business with other countries.

I was asked to speak today about the globalisation of Financial Services, and I will speak about this in two halves.

First I'd like to talk about the advantages of globalisation and what the UK can offer Ukrainian companies.

So I'd like to start by looking at the Ukraine/UK FS relationship.

What do we know? We know that Ukraine and the UK have a strong trading and financial relationship - with bilateral trade of around £753m last year; and they have been working together on financial services

- Well, first, Ukrainian companies are raising capital in London. 13 Ukrainian companies are listed on the London Stock Exchange, - 5 on the Main Market, and another 8 on the Alternative Investment Market, AIM.
- Second, several UK law firms with a commercial law interest are working in Ukraine - and one Ukrainian law firm, Magister, has an office in London.
- And third, there are many other UK financial and business institutions working in Ukraine; one example is the UK's international accountancy body, ACCA, which has 1600 students and around 250 members here. We would like there to be more.

So looking at the UK/Ukraine's relationship, you can see that globalisation has arrived: Ukrainian companies and institutions are going to the UK, and UK companies are coming here.  This will only increase in future.

In the UK today, we welcome overseas investors and offer them a level playing field.  

That is why
- we have 250 foreign banks in the UK - more than New York!
- A third of the world’s largest companies are headquartered in London.  
- nearly half the property in the City of London is overseas-owned  
- we have attracted many Sovereign Wealth funds including the Kuwait Investment Office ($265bn under management), Brunei Investment Authority ($30bn), Abu Dhabi Investment Authority ($875bn) and Temasek ($134bn)  
- and our cluster of highly skilled people in London come from all over the world - indeed, around 1/3 of Londoners were born overseas , and a similar number have higher education. It is a system that assesses people on merit and as a result our industry is one of the most innovative in the world.
- people come from all over the world to settle commercial disputes in our courts and to use the UK's alternative dispute resolution, because of our consistent, politically neutral legal system based on English Common Law with our independent judiciary that is highly regarded and trusted all over the world.  

We believe that the UK - and London - is an excellent base from which to globalise.

Not only do we welcome investors, but English is the lead language of global business  and we have an excellent time zone, between NY and Tokyo.

And with some 300 different languages spoken among our 8 million residents, many companies choose to use London not only as a business friendly gateway to the 490 million people in the European Union - (the world's largest market ) but also to the Middle East, North Africa and beyond.

Why the UK rather than elsewhere in the EU?

Well, first is about what we are: London is one of the world's leading international financial centres. Many say it is number one - for example, two research reports published in March ranked London no 1, ahead of New York (Global Financial Centres Index 5 and FDI magazine).

Second, is about the business environment we offer: many companies say we offer the best return on investment and that we are the top FDI destination in Europe.

Last year, London was voted top FDI destination in Europe for the 19th year running, ranking first for easy access to markets, qualified staff, external and internal transport links, telecommunications, availability of office space and languages spoken.

So it is no surprise to find that London attracts more inward investment than any other European country (more than 8% of all foreign direct investment into Europe in 2006)

Foreign Direct Investment accounts for around a quarter of London's economy and more than half a million people work in the more than 20,000 foreign owned firms there.  And according to the most recent research, foreign owned companies grew by 165% after investing in London, and only 6% of Inward Investment companies have ever considered leaving the capital.

We believe that the travails of 2008 have seen a flight to quality: the UK increased its market share by 2% during 2008 and overtook Spain in terms of number of new jobs created, and London continued in its leading city position in western Europe, attracting 288 projects, $17bn in investment and 29,923 new jobs through FDI.  

In other words, the UK and London are great places to invest and from which to globalise.

Now to the second part: over the past year, the perils of globalisation for financial services have never been clearer.

The global banking crisis has proved how globalised we have become: credit default swaps originated in the US, but the impact has spread around the world: the lack of liquidity in the financial markets created knock on problems in most world economies, driving many into recession. So financial services today is a very globalised industry: it's not just the Big 4 professional services firms who have globalised; and it is a process that shows no sign of stopping.  

In this globalised environment, we need to look at global solutions to the problems our financial systems have experienced: greater dialogue and cooperation over regulation; greater oversight and early warning of macroeconomic and financial risks.

I believe that the great danger of the Pittsburgh meeting of the G20 this month is that, now so many Western Economies feel they are seeing a slow recovery - the decisions taken at the London Summit in April to strengthen the financial system will quietly be dropped.  

And yet, this would be terribly foolish and short-termist. It is far too early to be sanguine, and to ignore the seriousness of what happened last year,

Looking around this room: our memories are surely not so short.

Globally, we need to be able to identify risks, and the regulatory authorities need to be able to do this too. If a financial institution is systemically important, we need to consider the possible solutions; we need to re-leverage financial institutions and ensure that pay structures work to the institution and shareholders' best advantage. We need global accounting standards, too.

Given how interrelated the financial system is, it will be difficult to do this without global participation.  Pittsburgh is our great opportunity and we need to seize it.

In this globalised world, we need paradoxically to form close relationships and work together - forming a global financial services village. One way of doing that is working and studying in different places to gain experience of those markets and to examine different ways of working.

That is why I would like to take the opportunity today to launch a Mansion House Scholarship - and the search for a candidate to study in the UK in 2010.

The Mansion House Scholarships were set up by Lord Mayors to allow people from other countries to work or study in the UK. In this room I hope we have the first ever scholar from Ukraine, Oksana Serdyuk, who studied for a Masters Degree in Financial Economics at Essex University just over 5 years ago. She was an excellent candidate and today is Deputy Director at the Ukrainian Institute of Financial Policy.

This will be the second award in Ukraine, and the 9th of my mayoralty to date - and will be the 88th scholar selected from 41 countries over the past 10 years.  For some people in financial services this will become part of a career trajectory that will take them all over the world - but for many, we have found that they bring their training and increased knowledge back to the country of their birth and help to grow and improve the financial services industry there.  

So I come full circle to the place we started out: globalisation is here to stay: we cannot put the genies of international trade, and high speed communications such as the internet back in the box; whether they sell electronics, natural resources or insurance, companies will seek to expand and market their product globally; London and the UK is a great place to do this from. But we in London appreciate the serious impact of a global financial crisis on our economies, and we believe we must take collective action to ensure that in the future risks are better understood and managed.

Thank you.

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