The pro.manchester Financial And Professional Services Sector Review September 2013

pro manchester
Financial and Professional Services Sector
Annual Review
September 2013
·
Thursday, 5 September 13

pro manchester financial and professional services review September 2013·
The financial and professional services sector review 2013 ...
Key Drivers of Growth in the City Region
The business, financial and professional services sector is one of the key drivers of growth in
Greater Manchester. The total number of jobs in the sector is estimated to increase from
200,000 at the start of the last decade to just over 300,000 by 2020.
Employment in the financial and professional services sector has also increased steadily. An
increase from 95,000 in 2000 to around 160,000 also by 2020. The business, financial and
professional services sector accounts for over 20% of employment and almost 30% of GVA in
the city region.
So what are the major challenges.
Accounting firms are doing well
Accounting firms are doing well. facing the challenge of reform and some consolidation in the
mid tier sector.The mergers of BDO and PKF and the acquisition of the assets of RSM Tenon
by Baker Tilly a measure of the change. Despite some short term challenges, prospects for
Manchester and the sector appear strong.
The legal sector faces the biggest challenge,
The legal sector faces the biggest challenge, with evidence of over capacity and the lack of
differentiation amongst some firms. The rapid expansion in the number of firms since 2005
has only partially addressed since the 2008 slowdown.
A report from The Association of Business Recovery Professionals (R3) suggests 30% of UK
law firms are at risk of failing within the next twelve months, despite the signs of recovery.A
crackdown on no-win, no-fee whiplash claims has pushed hundreds of law firms to the brink
of financial meltdown according to a recent report from CreditWatch.
Is it really so bad? Performance improvement and cost reduction have been the dominant
themes for legal firms.The ratio of non fee earners has fallen and support services have been
maximised to generate greater efficiency. Greater use of IT and back office efficiency still
offer potential saving. Challenge of new technology marketing including internet and social
media options are prevalent.
The economy is set to recover with significant expansion in domestic and commercial
property markets over the next eighteen months. Corporate finance market is also set for
significant recovery. We think some challenges remain but the outlook will change for the
better much sooner than anticipated.
Banking sector faces many key challenges ...
The Banking sector faces many key challenges not least the Co-operative bank restructuring.
plus The RBS (Project Rainbow) Group still faces an uncertain future, following the collapse
of the Santander deal.
Despite the demands of Basle II, Basel III, Global SIFI regulation, Cocos and collapsible bonds,
we are more optimistic about the UK regulatory environment under the Mark Carney
regime.
The recent statement in Nottingham, suggesting cash restraints will be lifted once Banks
meet the 7% Capital ratio is evidence of a pragmatic approach to the sector.
Private Equity and Wealth Asset Management
Private equity and wealth asset management are two of the strongest sectors in the region
and leaders in the respective field outside of London. MPEG, the Manchester Private Equity
Group leads the way in mid tier private equity.
Inward investment and near shoring
Inward investment and near shoring offer attractive opportunities in the FPS sector. Initiatives
instigated by MIDAS have included successes such as RBS Global Banking Services, the Bank
of NewYork Mellon,WorldPay and Aegis.
Summary
The business, financial and professional services sector is one of the key drivers of growth in
Greater Manchester. The total number of jobs in the sector is estimated to increase from
200,000 at the start of the last decade to just over 300,000 by 2020.
Despite the short term challenges, the Financial and Professional Services sector in Greater
Manchester is well placed to continue to be one of the key drivers of growth in the City
Region.
... drivers of growth in Greater Manchester.
“Despite the short term challenges, the Financial and Professional
Services sector in Greater Manchester is well placed to continue to
be one of the key drivers of growth in the City Region.”
John Ashcroft

Dr John Ashcroft Chief Executive of pro.manchester, Chief Economist at the
Greater Manchester Chamber of Commerce, a Director of Marketing
Manchester, and a member of the (AGMA) Greater Manchester Business
Leadership Council,
He is the senior economics advisor to Duff & Phelps and author of The
Saturday Economist.com a weekly round up of news on economics and events
in the UK economy.
John is a visiting Professor at MMU Business School, specializing in
Economics, Social Media, Corporate Strategy, Business and Financial
Modeling and an occasional lecturer at Manchester and Salford Business
Schools.
Educated at the London School of Economics, London Business School and
with a PhD in Economics from Manchester Metropolitan University, John is a
fellow of the Royal Society of Arts, a companion of the British Institute of
Management and a member of the Society of Business Economists.
About the authorAbout pro.manchester
pro.manchester is the members organisation which represents the financial
and professional services sector in Greater Manchester. Established in the
1980s, pro.manchester includes over three hundred member organisations
and organises over one hundred events each calendar year for over 6000
delegates.
Key events include the Young Professionals MIM awards, the Annual Business
Conference and the Annual Dinner.
If you are working in the financial and professional services sector in Greater
Manchester, you have to be a member of pro.manchester.
Contact Information
John Ashcroft
John.Ashcroft@pro.manchester.co.uk
pro.manchester
Tower 12
Spinningfields
Manchester
M3 3BZ

pro manchester ﬁnancial and professional services review September 2013
1,200
1,225
1,250
1,275
1,300
1,325
1,350
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Total employment in Greater Manchester
Total employment is forecast to
rise from 1.27 million at the end
of 2012 to a level of 1,350 by
the end of 2020.
An increase of 80,000 jobs
overall, a 6% increase in the total
ratio.
000
© Oxford Economics 2012 Greater Manchester Forecasting Model
·

150
175
200
225
250
275
300
325
350
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Employment in business, ﬁnancial and professional services
The business, ﬁnancial and
professional services sector is
one of the key drivers of growth
in Greater Manchester.
The total number of jobs in the
sector is estimated to increase
from 200,000 at the start of the
last decade to just over 300,000
by 2020.
000
·

75
100
125
150
175
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Employment in ﬁnancial and professional services
Employment in the ﬁnancial and
professional services sector has
also increased steadily.
An increase from 95,000 in 2000
to around 160,000 by 2020.
000
·
On current trends we consider
the forecasts included in the
Greater Manchester Forecasting
Model are reasonable, assuming
a reversion to a modest trend
rate of growth for the UK
economy.

24%
1%
14%
21%
18%
5%
8%
6%1%Share of Total Employment in 2015
Key Points
Construction 6%
Manufacturing 8%
Distribution 23%
Business Financial & Professional 21%
Creative, Digital, Sports,Tourism 14%
Public Sector, Health, Education 24%
·
Health
Education
Public Sector
Business
Financial
Professional
Creative, Digital
Sports,
Tourism
Wholesale,
Retail
M
anufacturing
Construction
Transport, Storage

19.6%
0.5%
12.5%
28.2%
13.0%
5.4%
11.0%
6.8%
3.1%Share of Total GVA 2015
Key Points
Construction 7%
Manufacturing 11%
Distribution 18%
Business Financial & Professional 28%
Creative, Digital, Sports,Tourism 13%
Public Sector, Health, Education 20%
·
Health
Education
Public Sector
Business
Financial
Professional
Services
Creative, Digital
Sports,
Tourism
Wholesale,
Retail
M
anufacturing
Construction
Transport, Storage

pro manchester
Financial and Professional Services Sector
Annual Review
September 2013
·
Key challenges for the sector

Accounting firms are performing well ....
·
Accountancy firms doing well ...
In general the accountancy firms are doing pretty
well. Firms were better prepared for the
economic set back in 2008, having learnt lessons
from the dot com boom and subsequent setback
in 2001.
Challenge of reform ...
The challenge to the hegemony of the big four
remains an ever present challenge. The threat of
compulsory audit rotation and or redistribution
amongst the mid tier firms remains on the
agenda.
There appears to be little appetite for this change
amongst key corporates despite the obvious
appeal to the “mid tier firms” including Grant
Thornton, BDO and Baker Tilly.
Redistribution or rotation does not present a
threat to the sector overall but there could be
some implication for staffing issues amongst firms
if rotation does take place.
Rationalisation and consolidation ...
Further rationalisation or consolidation is
anticipated amongst mid tier firms.
The BDO acquisition of PKF is expected to lay
the trail for others to follow. The Baker Tilly
acquisition of RSM Tenon, was long anticipated
after the dramatic expansion and float of RSM
Tenon.
Separation of consultancy ....
In general, accountancy firms have been seeking
to extend the amount of consultancy work
undertaken, in addition to the relatively narrow
margin audit work.
Deloitte, KPMG and Ernst & Young all made
significant increases to their consultancy incomes
in the past year or so. E&Y made the biggest
strides, posting a 20% increase in consultancy fees
to £370m.
KPMG remains by far the biggest player with
consultancy fees of £859m, representing a 10%
increase on the previous year. KPMG's
consultancy practice dwarfs that of its audit &
accounting and tax services, which produced
incomes of £456m and £392m, respectively.
Tax and tax avoidance issues
The political pressure on tax and tax avoidance is
a risk to major firms, placing pressure on
credibility, creativity and reputations, if
inappropriate advice is exposed.
Mid tier firms also thriving ...
Mid tier firms are also doing well, with Mazars and
Grant Thornton doing particularly well. BDO will
benefit from the RSM Tenon acquisition.
Grant Thornton have benefitted from the Growth
Accelerator Programme and are also bidding for
international development contracts with UKTI.
Many of the mid tiers have focussed or specialised
in niche areas including charities or the academic
sector.
Prospects appear strong ...
Training and trainee acquisition is experiencing
the biggest uptake for years.
Apprenticeships boost is good news for school
leavers but may have negative implications for
graduate intake in the near term.
The possible development of multi disciplinary
partnerships, [ability to undertake wills and
probates] may boost prospects for accountants
but add to the complicated threat agenda for the
legal sector.
The economic recovery and the the activity in the
corporate finance and commercial property
markets will also boost prospects over the next
few years.
No great challenges to the Manchester Outlook.

Auditors seek to extend consultancy roles
·
PRESSURE on profit and fees in audit and
compliance work is leading firms to reposition
themselves as broader advisory businesses.
According to the Accountancy Age Top 50 +50,
firms have continued to become more consulting-
based in their approach to clients, with three out
of the four largest firms reporting double-digit
growth.
Deloitte, KPMG and Ernst & Young all made
significant increases to their consultancy incomes
in the past year. E&Y made the biggest strides,
posting a 20% increase in consultancy fees to
£370m.
While the firm remains the third-largest auditor
in the UK based on income, Richard Fleming,
KPMG's UK head of advisory, concedes it is very
hard for the largest firms to "have a strategy to
gain market share".
"Audit is a very mature market," Fleming explains.
"To really add value to clients, you need to have
skills that are C-suite. You want to be a trusted
business advisor."
It is not only the Big Four that are beefing up
their consultancy work. Of the 23 other firms
providing data, 12 reported increases, compared
to six that posted a decline in income and five
that remained flat.
Menzies, ranked 23rd, has been busy growing its
consultancy practice through strategic
partnerships and acquisition, although this has yet
to come through in the firm's figures, which
showed a 5.4% decline.
During 2012, Menzies announced a joint venture
with Insight Management & Systems Consultant
to develop and grow specialist systems
consultancy and recently merged with TAL-
London, originally the London operation of Target
Consulting Group.
"Consultancy is something we are spending a lot
of time on," says Menzies' managing partner Julie
Adams. "HR consultancy has been good for us.We
have got an excellent HR department, so why not
spin that out to clients?"
Although firms ranked 51 to 100 did not provide
a breakdown in overall fee income, their smaller
size has not prevented them from targeting
consulting work as a way to grow their practices.
Bobby Lane, partner at Shelley Stock Hutter,
which appears in the list for the first time at
number 78, says the firm's outsourcing practice
has been growing at a rate of about 25% to 30% a
year.
According to Lane, the demands of clients are
changing. "They need someone to deal with issues
around financing, challenges around working
capital and access to finance.We have gone from
compliance role to being an expert that can offer
a broader range of services," he says.
Lane adds that providing "added value services"
will generate traditional compliance work for
firms. But accountants are hardly the first
profession to broaden the scope of their offering
to win more business. Insurance companies and
brokers have already moved in this direction with
Aon, the world's largest insurance broker,
providing human capital consulting services
through its Aon Hewitt division.
A move towards consultancy work will also see
firms compete with the likes of Mercer and
Towers Watson. However, Lane is confident that
accountants "are best placed to talk about the
business" given their existing knowledge of their
clients' financials through the provision of audit
work. August 2012

Baker Tilly completes RSM Tenon acquisition
·
BAKER TILLY has completed the
acquisition of RSM Tenon's trading
operations.
The acquired firm will continue to trade under its own
name "for a short period of time" until it operates
under the single Baker Tilly brand.
The jobs and employment rights of RSM Tenon's
2,300 partners and staff, across its 35 offices, will be
unaffected.
Laurence Longe, Baker Tilly's national managing
partner, said, "This merger is an excellent outcome
for the clients, partners and staff of both firms.
Bringing the professional skills, strengths and
expertise of Baker Tilly and RSM Tenon together as
one firm will significantly enhance our offering to the
market and provide further opportunities for growth
both nationally and internationally."
RSM Tenon's parent company entered administration
on 22 August with practitioners Matt Smith, Nick
Edwards and Clare Boardman of Deloitte appointed
as joint administrators. On appointment they
immediately sold the trading entities to Baker Tilly in
a pre-pack deal.
The sale was dependent on the shareholders of
Baker Tilly, largely composed of the partners, voting
for its approval. Accountancy Age understands this
vote took place on Friday.
At the time of the pre-pack sale announcement, a
statement from Baker Tilly said it has acquired the
trading operations "free from the burden of the
group's [RSM Tenon's] historic debt obligations" in
order to create an "enlarged and financially strong
Baker Tilly group".
"This transaction allows for the ongoing success of
RSM's Tenon's profitable trading businesses, free
from the burden of the group's historic debt
obligations, as part of an enlarged and financially
strong Baker Tilly group. We believe that this is an
excellent outcome for RSM Tenon's clients and
employees," it said.
Following the discovery of accounting irregularities in
2011, RSM Tenon management restructured the
business and engaged in a cost cutting exercise.
However, RSM announced that its sole lender Lloyds
Bank would not renegotiate banking covenants
earlier this year, largely because the firm had
changed so dramatically in the course of the year.
RSM Tenon announced in June that it was in merger
discussions with Baker Tilly. However, Baker Tilly
said in August it would not make an offer for RSM
Tenon's parent company which held all the debt.
Baker Tilly subsequently bought the trading entities,
which were not in administration and were free from
debt, from the Deloitte administrators.
UK Fee Income £ m 2012
PwC 2,461 1
Deloitte 2,098 2
KPMG 1,707 3
Ernst &Young 1,465 4
Grant Thornton 387 5
BDO *** 282 6
RSM Tenon ** 234 7
Smith Williamson 179 8
Baker Tilly ** 171 9
Moore Stephens 138 10
Mazars 114 11
PKF *** 103 12
Haines Watts 62 13
Begbies Traynor 62 14
Crown, Clarke,W 59 15
Saffrey Champness 56 16
UHY HackerYoung 49 17
Kingston Smith 41 18
MHA Macintyre Hudson 35 19
Wilkins Kennedy 30 20
How the top 20 looked last year

BDO and PKF complete merger deal
·
THE MERGER between BDO and PKF has been
completed, creating a firm with nearly £400m in
revenues.
Plans to merge the two firms were announced at the
end of last year, and now completed sees BDO
operate out of 24 offices with 300 partners.
Simon Michaels, managing partner of BDO LLP, said:
"It's time for people to think again about BDO.
Merging with a firm of the quality and size of PKF has
created one of the strongest firms focused on the
mid-market, with the breadth and depth to work with
ambitious businesses that want exceptional service
and access to impressive UK and worldwide
networks.
"We've got talented people, an ambition to grow from
this position of strength and firm financial
foundations. We're proud to be at the forefront of the
change in the market and, with the Competition
Commission reporting back on its remedies to the
FTSE 350 audit market, we will also be looking for
opportunities to work with more FTSE-listed
businesses than ever before."
Speaking to Accountancy Age in December 2012
after the firm announced a 12% dip in profits,
Michaels said that the firm would continue to invest
for the long-term, even if that impacted on short-term
profits.
"People are looking to join us as they see us
investing and going places. I don't think we'll have an
issue retaining and winning talent."
Further consolidation expected ...
In a recent Accountancy Age poll 85% expected further
consolidation in the mid tier section.
UK Fee Income £ m 2012
PwC 2,461 1
Deloitte 2,098 2
KPMG 1,707 3
Ernst &Young 1,465 4
Grant Thornton 387 5
BDO 282 6
RSM Tenon 234 7
Smith Williamson 179 8
Baker Tilly 171 9
Moore Stephens 138 10
Mazars 114 11
PKF 103 12
Haines Watts 62 13
Begbies Traynor 62 14
Crown, Clarke,W 59 15
Saffrey Champness 56 16
UHY HackerYoung 49 17
Kingston Smith 41 18
MHA Macintyre Hudson 35 19
Wilkins Kennedy 30 20

Legal Sector facing the greatest challenge ...
·
The legal sector faces a number of key challenges
manifest in part by the collapse of Halliwells in
2010 and Cobbetts earlier this year.
Consolidation in the sector is significant. Fentons,
with offices in Manchester, Failsworth and in
London, is to be acquired by Australian
consolidator Slater & Gordon.
Mills & Reeve acquired George Davies. Gateley
acquired part of the Halliwell business and DWF
picked up a large part of Cobbetts.
Further consolidation is expected and further
defaults are a possibility as banks reassess risk.
A report from The Association of Business
Recovery Professionals (R3) suggests 30% of UK
law firms are at risk of failing within the next
twelve months, despite the signs of recovery.
A crackdown on no-win, no-fee whiplash claims
has pushed hundreds of law firms to the brink of
financial meltdown according to a recent report
from CreditWatch.
The claims from R3 and CreditWatch may be
somewhat exaggerated but significant issues are
evident. The major problems can be identified as :
Overcapacity
Overcapacity, a radical expansion in the number
of lawyers and legal firms in the UK from 2005
onwards has led to overcapacity in the sector, a
problem only partially addressed to date.
Lack of Differentiation
Lack of differentiation amongst key firms has led
to an inability to create competitive advantage
with a unique identity or selling point.
The Legal Services Act
Affectionately known as ‘Tesco Law’ enables
Alternative Business Structures (ABS). Legal
services are easier to access, allowing non-lawyers
to invest in and own legal businesses.
Legal Aid Whiplash
A crackdown on no-win, no-fee whiplash claims
has pushed hundreds of law firms to the brink of
financial meltdown according to a recent report
in The Times.
Nearly 900 solicitors’ firms have a one-in-four
chance of failing because of government reforms
to personal accident claims, cuts to legal aid and
the lingering effects of the financial crisis.
Nearly 500 have zero or even negative net worth
according to a report from Creditwatch.
New Players
Including “bucket shops” to deal with high
volume, low law, conveyancing and PPI claims as
examples.
Online aggregators to acquire leads for
personal injury, PPI mis selling, wills and probate.
Market Slow down
The recession clearly impacted on the housing
market with a significant fall in conveyancing
volumes. With some recovery in prospect,
volumes are still down by 50% from peak.
Commercial Property
Similarly impacted by the slow down, deal teams
have been frustrated by the lack of action.
Corporate Finance Activity
Has been much subdued over the last four years
with a fall in the number of deal volumes limited.
Regulation - COLP, COFA and Jackson
Compliance Officers for Legal Practice (COLPs)
and Compliance Officers for Finance and
Administration (COFAs) play a key role in the
SRA (Solicitors Regulatory Authority) regime.
Jackson review of civil litigation costs LSC Legal
Service Commission - pressure on price models.
lawyers feel the pain
of whiplash crackdown

Legal Sector ... not all doom and gloom
·
Performance improvement and cost reduction
have been the dominant themes for legal firms.
The ratio of non fee earners has fallen and
support services have been maximised to
generate greater efficiency.
Greater use of IT and back office efficiency still
offer potential saving.
Challenge of new technology marketing including
internet and social media options are prevalent.
The economy is set to recover with significant
expansion in domestic and commercial property
markets over the next eighteen months.
Corporate finance market also set for significant
recovery.
The potential to develop near shoring options
amongst UK top 50 offers opportunity for job
creation in the sector in Greater Manchester.
Still lots of potential for near shoring ...
8,000
8,500
9,000
9,500
10,000
10,500
11,000
2001 2003 2005 2007 2009 2011 2013
800
900
1,000
1,100
1,200
1,300
2001 2003 2005 2007 2009 2011 2013
Chart 1: Law firms in the UK Chart 2: Law firms in the NW
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
1,600,000
1,700,000
1,800,000
1,900,000
2008 2009 2010 2011 2012 2013
Chart 4 GM Top 20 turnover
The number of law firms in the UK and the
North West increased significantly from 2007.
Although the number of firms peaked in 2009,
current levels remain ahead of the average in the
early 2000s. Charts 1 & 2.
Turnover amongst the top legal firms in Greater
Manchester continues to rise despite the set
back of Halliwells in 2010. Chart 4.The number
of jobs is resilient despite the challenges. Chart 3
10,000
11,000
12,000
13,000
14,000
15,000
16,000
2008 2009 2010 2011 2012
Chart 3 GM Top 20 - total employment
86% are 1 - 4 partner firms

Sector Review
The banking sector continues to face many
challenges including regulation, new technologies
and a challenging political environment.
In Manchester, the headlines have been afforded to
the Co-operative bank following the reassessment of
the Britannia portfolio amongst many other issues.
For RBS, the uncertainty over the future of RBS
(project Rainbow) continues, following the collapse of
the deal with Santander.
For the moment this can only be considered as an
opportunity rather than a challenge to the banking life
within the city itself.
Santander have embarked on a significant expansion
programme following the switch to organic growth as
they plan significant branch extension across the
North West.
The Irish banks are “back in town” following their
abrupt departure post 2008 with Allied Irish now back
in pro.manchester membership.
Handelsbanken are embarking on an expansion
programme revealing plans last year to double the
size of the Manchester headquarters at Manchester
Airport to over 14,000 sq ft. doubling the workforce to
120 in the process.
Bank of New York Mellon and RBS Global Banking
Services, are exemplars of the MIDAS success for
inward investment in the sector.
New Technology
New technology, especially in relation to online
banking, will place great pressure on bank retail
networks.
Direct payment networks, including Google Wallet,
iZettle and Ixaris will challenge existing player options
such as Barclays PingIt.
Regulators
The Prudential Regulation Authority (PRA) will ensure
the stability of financial services firms and be part of
the Bank of England. The Financial Conduct Authority
(FCA) is now the City's behavioural watchdog. The
Bank of England has gained direct supervision for the
whole of the banking system through the Financial
Policy Committee (FPC), which can instruct the two
new regulators.
THE AUDITORS of the Co-op Bank have confirmed
the lender will be unable to continue as a going
concern if it fails to secure an emergency injection of
capital.
In notes to the bank’s interim accounts, in which it
announced a pre-tax loss of £709m for the first half of
2013, auditors KPMG warned of "significant doubt"
over its ability to remain a going concern if it is unable
to agree a £1.5bn rescue plan with its bondholders.
Parent company the Co-Operative Group is planning
to launch a £1bn exchange offer later this year, which
will require bondholders to contribute £500m as their
holdings are converted into shares in the bank, which
will list on the stock market. A further £500m is
expected to be funded through the sale of the Co-
op's insurance business.
However, KPMG said there are "material
uncertainties" that the rescue plan will go through.
The bank suffered a £496m impairment charge on its
loans, largely stemming from its takeover of Britannia
Building Society in 2009. It was also hit with a
£148.4m write-down on IT assets.
Banking sector faces many key challenges ...
KPMG warns of Co-op Bank’s going concern status
“Despite the demands of Basle II, Basel III, Global
SIFI regulation, Cocos and collapsible bonds, we
are more optimistic about the UK regulatory
environment under the Mark Carney regime”.
The recent statement in Nottingham, suggesting
cash restraints will be lifted once Banks meet the
7% Capital ratio is evidence of a pragmatic
approach to the sector.
The mis selling of PPI insurance and swaps may be
creating a penalty overhang for the banks but it opens
up an opportunity for legal firms - Berg & Co and
specialist financial firm Seneca.

Private banking and wealth asset management
·
Manchester has a strong position ...
Manchester has a strong position in private
banking and wealth asset management with a
significant client base in the North West.
The sector faces the challenges of the Regulation
and the Retail Distribution Review specifically,
together with the issues created by new
technology.
However, the challenges are national challenges
and the city is well placed to benefit from the
changing pattern of wealth asset management.
Improved client service
In the private banking and wealth management
industry, the focus and activity is shifting towards
improved client service and delivering real added
value.
New competitors are challenging the dominance
of established firms, and the impact of new
regulations and more demanding client
expectations are forcing private banks and wealth
managers to change the way they operate.
Current issues ...
Private banks and wealth managers are facing
increased pressures on costs, tougher regulatory
demands and the requirement for greater
transparency.
The industry has historically underinvested in the
back and middle office, and businesses are at
different stages of their operational evolution.
Many continue to run out dated systems and
manual processes. Technology budgets are being
directed to better support client relationship
managers and the front-end client experience.
Shortage of talent ...
The shortage of talent is one of the biggest
barriers to future growth. Top quality people are
becoming more valuable, more difficult to source
and more expensive to train.
Links between performance and pay are becoming
critical. New strategies, incentives and support are
needed to attract and retain qualified
professionals.
More “self” management
Clients of wealth managers are more active in
managing their own financial affairs and they are
paying increased attention to reputation,
regulatory compliance and risk management.
New online players are emerging such as Nutmeg.
Business Risk Management
Businesses risk management systems and
processes are being upgraded to provide
integrated approaches to better align risk and
value.
Global strategy ...
The global wealth management industry is now at
the forefront of regulatory change. Cross-border
standards, customer protection and transparency
are anticipated to impact the front-end client
experience and increase costs.
New online players are emerging such as nutmeg.
Acknowledgement
PwC Wealth Management and Nutmeg.com
Major Manchester Players
ABN AMRO Equilibrium
Adam Bank Investec
Barclays Wealth Mutual Financial
Brewin Dolphin Quilter
Brown Shipley Rothschilds
Coutts & Co W H Ireland
Credit Suisse Xentum
No great challenges to the Manchester Outlook.

Corporate ﬁnance, private equity and venture capital
·
Manchester maintains the reputation as the
largest mid tier private equity group in
Europe. MPEG the Greater Manchester
Private Equity Group.
Private Equity
ECI Partners
Endless LLP
Equistone
EV Group
Gresham Private Equity
Infinity
Isis
Lloyds development Capital
Maven Capital Partners
Northedge
NVM
Palatine Private Equity
Pheonix Private Equity
YFM Private Equity
Zeus Capital
Venture Capital
350 Investment Partners
A2e
Acceleris
Aquarius Equity
AXM Venture Capital
B7 Venture
Seneca
Valco
New Players
Business Growth Fund
North West Business Finance / Fund Managers
Corporate Finance
Altium
Clearwater
Cole Associates
Convex Capital
Dow Schofield Watts
DTE Corporate Finance
Rickett Mitchell
Watts Commercial Financ e
Specialist advisers
Ansarada
Bovill
Corpfin
Business Angels
Atherton Clarke / VC
Beer & Partners
Envestors
Restructuring
Begbies Traynor
Duff & Phelps
Focus Insolvency Group
Asset Based Lending
Bibby Financial
Bridgebank Capital
Bridging Finance
Burdale
PNC Business Credit
The Business Growth Fund
BGF was established in 2011 to help Britain’s
growing smaller and medium sized businesses.
Backed by five of the UK’s main banking groups –
Barclays, HSBC, Lloyds, RBS and Standard
Chartered – BGF is an independent company with up
to £2.5bn with which to make long-term equity
investments.
The North West Fund Managers
Six fund managers manage specific aspects of the
North West fund :
Venture Capital - Enterprise Ventures
Development Loans - FW Capital
Mezzanine Finance - Enterprise Ventures
Bio Medical - Spark Impact
Digital & Creative - AXM Venture Capital
Energy & Environmental - 350 Investment Partners
“Major challenges in the sector include a slow corporate
finance market, over capacity in the mid tier private equity
market, a shortage of deal flow, limited deal gearing in a
restricted bank market, extended time to completion and
greater legislative over view”.
Nevertheless, the spate of recent deals and fund
successes in raising new monies is a tribute to risk
appetite amongst investors and the prospects for the
future” JKA
lots of capacity - chasing opportunity.

MIDAS - inward investment and near shoring present real opportunities ...
·
Active pipeline ...
There are currently 69 FPS projects in the pipeline
from a variety of sub-sectors – Legal services
features heavily followed by Banking and Insurance.
The majority of enquiries range from between 20-50
jobs with a select amount going into the hundreds.
They are all at various stages and Manchester still
faces competition from several other UK locations.
In terms of the overall strategy for the sector, a few
points to note include:
Manchester in strong position ...
Manchester is in a very strong position for higher
value financial services relocations, with options of
combining more complex and back and middle office
functions for investment banks and large insurance
companies.
MIDAS is in regular and frequent dialogue with the
main financial institutions both in the UK and
Internationally. Part of the challenge is relocation out
of London is more likely to follow earlier investment.
It is more likely banks will move staff into existing
hubs eg (Deutsche – Birmingham / JP Morgan –
Bournemouth) as opposed to new green field sites.
Whilst maintaining contact with such firms, MIDAS
also have a strong focus on key account
management, targeting those FS institutions that
haven’t yet explored an on shoring strategy.
High end specialized IT projects
MIDAS also targets, higher end specialized IT
projects, supporting sophisticated financial
institutions (Big Data/Analytics/Informatics/
Telemetrics)
FinTech is also a growing sector for MIDAS
“We are looking to develop and are well positioned to
do so given our expertise in ICT and FS”. The types
of companies in this space include Peer to Peer
Lenders, Consultancies providing ICT support to
banks/FS companies on technology infrastructure,
mobile banking/app development etc.
Additional regulation offers opportunities ...
Opportunities arising from new regulations
particularly in the banking sector, where cost
implications are likely to have a significant bearing on
operational location strategy. i.e. separation of retail -
business banking and Basel lll / Dodd Frank.
Legal Sector Options and near shoring ...
MIDAS is actively engaged in the legal sector and
near shoring opportunities. Andrew Toolan, Business
Development Manager adds “I have already
contacted the 100 largest UK-based law firms and we
have ongoing dialogue with a number of firms
including some magic/silver circle firms.”
“It also includes conversations with Manchester
based firms that are either headquartered or have
significant operations in London but have the
potential to move paralegal/back office roles”.
MIDAS successes in the sector
In 2012-2013 - Financial & Professional Services
accounted for 15% of MIDAS success projects.
“Business Services” (which includes contact centres/
outsourcing/shared services) accounted for 11%.
For the same period the success breakdown (by jobs
created) for FPS was 19% and Business Services
12%
Major
recent
successes

Jobs
BNY
Mellon

169
RBS

460
Worldpay

250
Aegis

710
Money
and
Credit
Group

70
Browne
Jacobson

60
Sainsbury’s
shared
service
centre

205
80
ICT
roles
and
125
Finance
Roles

Bank
of
East
Asia

13
Acknowledgement
MIDAS team and Andrew Toolan.

·

The pro.manchester Financial And Professional Services Sector Review September 2013

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