Russia is already an important a gateway to numerous emerging markets and boasts an impressive agglomeration of leading global businesses including many of the largest international banks such as JP Morgan, Goldman Sachs, CitiGroup, Deutsche Bank, Societie General,. HSBC, Standard Chartered and Barclays as well as more than a dozen UK-based legal firms such as Clifford Chance, Allen and Overy, Linklaters and Herbert Smith.
The City of London has undertaken to build on these links and, during my recent visit, I co-chaired the first meeting of the City of London – Moscow International Financial Centre Liaison Group with Alexander Voloshin.
However, if the Russian government is to achieve its stated aim and develop Moscow as an international financial centre, it is clear there remain serious obstacles to overcome.
In the recent Global Financial Centres Index report that looks at the relative attractiveness of financial centres from an industry perspective, London came out on top whilst Moscow lagged behind in 68th.
A common feature amongst the world’s leading financial centres is that firms have confidence in them as places to do business – they are underpinned by a commitment to certainty, predictability and transparency, particularly with regards to the rule of law.
Russia on the other hand ranked 154th out of 178 on Transparency International’s Corruption Perceptions Index in 2010 and 123rd out of 183 on the World Bank/IFC Ease of Doing Business report in 2011.
In addition, Moscow’s transport infrastructure also leaves much to be desired - it is a good job it is such a spectacular city because I certainly had plenty of time to survey the scenery from the comfort of my car!
This may seem like a trivial concern but maintaining an efficient transport system requires constant investment and should be a priority for any modern financial centre.
Fortunately, the Russian Government recently announced plans to invest US$1 trillion in upgrading the country’s infrastructure.
With more than 20 years’ experience of public-private partnership work, UK firms have all of the skills and expertise necessary to be at the forefront of this revolution and the new Mayor of Moscow, Sergei Sobyanin, was quick to highlight the many opportunities that will be available as he seeks to kick-start the infrastructure redevelopment in his city.
Of course my visit was not all about helping Russia to develop and modernise; I also wanted to demonstrate that the City remains open for business and, more specifically, that it can meet all of the business requirements of Russian firms.
Recent reports in the UK have suggested that Russian firms are increasingly reluctant to list in London, preferring to raise capital in the Far Eastern markets instead.
London has traditionally been the financial centre of choice for Russian companies looking to raise capital - there are currently 45 of them listed on the LSE main market, with 17 more on its sister AIM market - and there is no reason this should not remain the case going forward.
Whilst the appeal of other financial centres should not be underestimated, there can be no doubt that London’s capital markets offer unparalleled access to deep pools of liquidity and to an incredibly broad international investor base.
Clearly it is not just Russia that stands to benefit from the forging of closer ties between our two countries, particularly with regards to financial services. UK firms stand to benefit at an every stage of the process, be they infrastructure firms engaged in PPP or financial services firms able to operate in an increasingly open and stable marketplace.
That is why this visit was high on my agenda for my year in office and that is why I am sure it will remain a top priority for my successors in the years to come.