Finance in Britain

Testifying to its dominance in world markets, the daily turnover of money in London`s Exchange Markets alone is about $300 billion compared to $192 billion in New York and $128 billion in Tokyo. Nearest to London`s turnover in Europe is Zurich, with a turnover of over $68 billion.

Today, the city of London remains the world`s leading international financial centre for good reasons. The city offers:

♦ The world`s biggest international financial markets

♦ A time zone advantage in 24 hour global dealings

♦ Comprehensive financial expertise and Innovation

♦ International professional advertisers

♦ Liberal financial regulations

♦ World-wide communications

♦ A stable political climate

♦ A compact location with first rate amenities and new, prime

office developments in nearby Docklands)

♦ Sovereign location for overseas operations

♦ World class cultural entertainment

Merchant Banks are so called because they originate from large merchants engaging in banking

activity. Their traditionally important roles were helping foreign governments to raise loans and accepting Bills of Exchange but they are today involved in a range of services including corporate finance, foreign exchange dealings and securities trading

The discount houses are unique to Britain an occupy a central position in the British monetary system. They act as intermediaries between the Bank of England an the rest of the banking sector promoting an orderly flow of funs between the authorities an the banks.

The Investing Institutions collect savings drawn from the personal sector and invest them in securities and other assets. The main investment institutions are insurance companies together with insurance broken firms, pension funds, unit trusts an investment trusts. Together, they represent a massive pool of funds for investment.

The Bank has three important groups of customers:

Commercial banks in the clearing system keep accounts at the Bank of England, using them at the end of each day when money is cleared. They must separately keep an agreed amount, currently 0,35%, of their sterling deposit base with the Bank in a non-interest bearing account; this is the capital ratio deposit and provides the main source of income for the bank.

Government keeps its main banking accounts at the Bank of England so that payments by the Government are ultimately made to and from the Bank. Surplus funds are invested in the money markets or used to reduce the Government`s short-term dept.

Foreign central banks keep accounts and gold at the Bank of England and may conduct foreign exchange and bullion business in London through the bank.

The British insurance industry is highly sophisticated and provides all-embracing services to millions of policyholders in Britain and overseas. Policyholders include governments, corporations, companies and individuals.

London is the world`s leading centre for insurance and for the placement of international reinsurance. It is estimated that some 20 per cent of all insurance handled internationally is placed here. A large number of overseas insurance companies are represented in Britain, many working closely or in affiliation with British companies. Conversely, the largest British insurance companies operate internationally through overseas subsidiaries or through affiliated companies.

The industry falls into two board categories:

Long term insurance involves the provision of life policies as well as long-term contracts for savings and investment. Premiums are invested in securities and other assets.

General insurance is carried out by insurance companies and by Lloyd`s of London and involves the provision of cover for fire, accident, general liability, short term life, motor, marine, aviation and transport.

Lloyd`s is a unique society of private insurance underwriters incorporated by an Act of Parliament in 1871. It developed from informal trading in marine insurance carried out by merchants in Edward Lloyd`s coffee house in Lombard street in the 17^th century.