The location of investment banking business

[eng] Since 1998, there have been more foreign banks in France than French ones. Many of these banks are wholesale banks or investment banks. This article reviews the factors that lead banks to locate their investment banking activities in a particular market. The author mentions three factors. First, history, and this holds true for the role within Europe of London where the first bond and equity issues of any significance took place. The second factor is the location of clients, be they issuers or investors. In the author’s view, however, trading activities can be located anywhere. The third factor is the growth strategy model of investment banks. This model, called a « tubular strategy », is characterized by development in a particular business segment followed by an offshoot in another segment in synergy with the first one. This growth model leads banks to operate close to specific client bases. The author illustrates his point with the example of HSBC, the second largest bank in the world. This model also explains the strong presence of US banks in Europe and finally the location of non-French banks in France. In conclusion, the impact of new technologies on the location of investment banks is mentioned. . JEL Classification : G24, R38