Half of Britain's biggest City firms are foreign-owned

Global firms are pouring investment into London's premier financial district, a report has found.

by Rebecca Burn-Callander
Last Updated: 09 Oct 2013
Of the UK’s financial services companies worth more than £100m, 46% are owned by overseas companies, says IMAS, an independent M&A adviser. And that figure is set to rise to 50% within three years.

The US is, predictably, the biggest overseas buyer of British firms, owning 47% of these foreign-owned businesses - Britain is a prime spot from which US firms can target the European markets, the report posits. But it’s not all about our American cousins. The rise of the emerging markets has seen Brazil, Russia, India and China together increasing their investments in UK financial services by 29% in the last year alone.

UK Trade & Investment, which co-produced the report, has leapt on the data, saying that the record levels of foreign investment prove that Britain is a highly attractive option for international businesses looking to expand. Indeed, overseas-owned businesses were the most active acquirers of UK financial services firms in both 2011 and 2012.

On the subject of the UK’s biggest companies, top bosses are facing significant bonus cuts this year. According to a survey by PwC, just 10% of FTSE 100 firms are planning to increase bonuses, with 17% predicting payouts will fall by more than a quarter.

Bonuses may be falling but salaries are starting to rise as a result. The report has revealed that 52% of firms are predicting an increase in salaries of between 3% and 4%, with 10% predicting even steeper rises. But 38% of companies are also predicting a pay freeze for their highest fliers. However, only 15% will see an actual cut in pay, despite the economic conditions.

This is a new age of ‘restraint’ said financial services firm PwC, after the public backlash over the vast sums being paid out to company bosses despite the financial crisis. In 2012, bonuses crept up to around 80% of pay. This year, they will sit around the 60% mark. Banks are likely to hand out the stingiest bonuses, what with all those Libor and PPI-related fines to pay, reckons the report.

Tom Gosling, head of PwC's reward practice, says, ‘Calls from shareholders for pay and bonus restraint appear to have hit home’.

But Gosling warns that slashing packets could be bad for business in the long run: it could deter foreign executives from joining UK firms. ‘The UK benefits hugely from the flow of talent to our shores, ‘ he says, ‘bringing with it investment, jobs and tax revenues and care must be taken not to damage our competitive position.’

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