When an IRA bomb virtually destroyed the centre of Manchester in June 1996 it quickened the pace of a ball already set in motion to transform a run-down city into one worthy of a regional capital.

Nine years later and it has even surprised itself. Such has been the success of its bids to attract inward investment - along the lines of that seen, for example, by the Irish Development Agency in the 1980s - that it has now positioned itself on the global stage, in competition with cities such as Madrid, Barcelona, Dublin and Amsterdam.

Local rivalry is dismissed. 'In reality it's not an issue,' says John Barnacle, chief executive of Pro-Manchester, a professional partnership body, including accountants, which seeks to position Manchester as a significant player in the global financial and professional community.

It would, he grants, be very unusual for a Yorkshire company that couldn't get what it wanted in Leeds to come to Manchester, and 'frankly I think it would probably work the other way round as well. But if Manchester is trying to position itself as a significant force in a global marketplace then actually what Leeds or Birmingham are doing doesn't matter. It matters what Manchester is doing, which is to position itself on the stage on which it wishes to play.'

At the forefront of Manchester's regeneration has been the charismatic personality of Manchester City Council's chief executive, Sir Howard Bernstein.

He has proved to be a shining example of how a progressive-thinking public sector leader with a natural ability to understand what makes the private sector tick, can carry through a visionary project.

Bernstein has been involved with MCC for all his professional life, from the early 1970s. He became deputy chief executive in 1990 and led the taskforce on the rebuilding of the city centre after the bomb in 1996.

He was appointed chief executive in 1998.

'Local government has undergone over a period of years dynamic changes and I think one of the things that has always characterised Manchester, and Manchester City Council, is that we probably understood before many others what the new role of local government needed to be in the way in which industrial cities reinvented themselves.

'It's clearly the case that if you looked at Manchester in the 1960s and 1970s it was struggling to adapt to the changing world. What we started to do, particularly in the mid-1980s onwards, was to make it clear that we were not just there to oversee the provision of services, we were actually there to give real leadership to how a process of reinvention can take shape, whether we're talking about diversifying the local economy, creating the infrastructure which is needed to underpin the investment decisions, or whether we're talking about the development of critical mass of cultural, sporting and other facilities, which we all know are very important if you are going to create a dynamic and sustainable city.

'They were all objectives which we as a council defined for ourselves.

And that process of reinvention continues, so the job is never done.'

Manchester was pioneering public-private partnerships before the Labour government even came to power. Bernstein has secured PPPs worth a combined value of around £3bn over the past decade.

Behind Bernstein stands a united partnership of professionals and academics who share his passion for the city's regeneration. They have worked together closely to deliver the Manchester package to potential investors. These include the Pro-Manchester group and MIDAS, the inward investment agency, Invest in Manchester, Manchester Enterprises and the universities, which have been delivering on training.

Much of Manchester's trail-blazing has been in the financial and professional services sector, which is the largest and fastest-growing outside London, growing one-third in size since 1998 to more than £9bn in 2005.

The majority of FTSE 100 companies are present in the region, and 500 other companies have headquarters there. Manchester-based firms were responsible for most of the £15bn of mid-market deals generated in the north of England in the last 12 months, and a large number of local high-growth companies continue to list on the alternative investment market (AIM). There is therefore a large financial market to service.

The major accountancy firms of Pricewaterhouse-Coopers, KPMG, Deloitte, Ernst & Young, Grant Thornton, Baker Tilly and BDO Stoy Hayward employ some 2,530 staff between them in the Manchester area. It is Deloitte's largest UK practice outside London, employing around 600.

Some of the major financial services employers include Co-operative Financial Services (6,000 employed), Royal Bank of Scotland (5,000), Barclays (3,000), London Scottish Bank (1,200) and Royal & Sun Alliance (600).

There are over 60 banks based in Manchester. Corporate banks include Allied Irish Bank, Alliance & Leicester Commercial Bank and Bank of Ireland.

A significant number of companies in fund and asset management also have bases in Manchester, among whose ranks are Coutts, UBS, Singer & Friedlander, and MN Rothschild.

Stockbrokers and insurance companies are also well represented. Marsh, Aon, Chubb and AIG have operations in the city.

Shared financial service centres have also been a recent trend. Among the list setting up such centres are TetraPak, Kelloggs, Michelin, AstraZeneca and most recently Bank of New York (see box), which are all recruiting accountants.

'Kelloggs has centralised its finance functions in Manchester and employs quite a large number of predominantly part-qualified accountants,' comments Liz Demaison, business development manager for financial services at MIDAS.

She adds: 'A lot of those had to be people with multi-lingual skills as well, which as a cosmopolitan city, with many international students, Manchester can service well. The city has become much more cosmopolitan over the past 10 years and you've only got to walk down the street and you hear Spanish, Italian - a real melting pot of nationalities. And I think that's been great in terms of attracting pan-European operations to the city.'

With the largest concentration of students in Europe - 100,000 undergraduates at its four universities - a ready-made talent pool is one of the attractions for companies setting up operations in Manchester.

'I don't think we can underestimate the significance of the skills part of any decision to invest in Manchester,' says Peter Fell, director of regional and economic affairs at the University of Manchester. Fell believes this was a major factor in the Bank of New York's choice of the city for its new operations centre.

'For students studying at the Manchester Business School, the city can now offer them their first and second posts in Manchester as well. If the opportunities are there, they will want to stay. The quality of life and the social scene mean that once students have had the Manchester experience, they want to continue and stay with that.'

In terms of training accountants, the city's opportunities range from the University of Manchester, with its five-star accountancy department - a research-focused department - through to Manchester Metropolitan which has more vocational-based courses.

'As in the competition for inward investment, with the University of Manchester itself we see our competitors as being the top international universities rather than fellow universities in the north of England,' adds Fell.

The city also offers a unique professional apprenticeship scheme whereby 18-year-old school leavers with 'A' levels can start work and train for CIMA and ACCA qualifications, on an 'earn as you learn' basis.

This offers an alternative to traditional university education. It is funded through Manchester Enterprises, the economic development agency for Greater Manchester, and is delivered by its operating company Skills Solutions.

Manchester is also one of three initial centres (the others being Tower Hamlets in London, and Norwich) to be chosen by the Financial Services Skills Council to set up a National Financial Services Academy. This is a part of the National Skills Academies initiative, a government-led project to provide vocational education and training for young people and adults.

However, not everything in the garden is rosy, and the current shortage of accountants is affecting Manchester as it is London.

Patrick Loftus, audit partner at Deloitte, which currently employs 600 staff in Manchester and has an annual fee income of some £80m, says that the firm is increasing by about 80 employees a year, including 50 graduates, but is struggling to fill that quota.

'Finding 50 graduates is proving quite difficult. People's aspirations are different. People want time out to travel. So we're finding a lot of students will take the first year after graduating out. But on the other hand, they are staying local when they come back.'

The firm services all the big areas in terms of industry sector. Deloitte is strong in property, financial services, retail, and travel and tourism.

'The transaction side is what's been really taking off - it has broadened considerably,' says KPMG partner Bill Enevoldson. 'The biggest constraint we've got now, however, is staff to actually do the work.'

KPMG's Manchester practice is one of three in the North West, the others are in Liverpool and Preston, with a total of 613 fee-earning staff.

Loftus says: 'There's a need for a skill set now in order to deliver a whole host of services but it's not an easy role.' However, he says that while there are shortages of accountants, the provision of a full range of professionals from high-level corporate decision-makers, to highly trained and experienced administrative and customer service staff, the work by the MIDAS, Pro-Manchester and the universities has been crucial.

'The talent pool is phenomenal,' he says.

'We had a major client, Japan Tobacco,' adds Loftus, 'which made a similar choice as the Bank of New York to set up a shared service centre in Manchester, largely on the skill set deliverable. It set up the centre from scratch about 18 months ago and has now grown to an organisation employing 150 people.

'The number of major companies that have moved into the North West, including the Royal Bank of Scotland's stake - its two new premises are absolutely amazing - is causing a whole host of businesses to look at Manchester in a different light,' says Loftus.

Loftus believes that big changes in the regulatory environment for financial institutions, including changes to the way they approach their customers, how they get return on capital, changes in capital structures will increase the trend for relocation.

Pro-Manchester's Barnacle says that over the past couple of years it has been working with a group of employers on how they should position Manchester in five to 10 years' time. 'What are the implications not only on the skill sets required to service businesses, but also in terms of infrastructure. Will the infrastructure take it? Will it be sufficient?'

As Sir Howard Bernstein points out, Manchester cannot rest on its laurels.

It has to undergo a process of continual reinvention.

'The process of reinvention continues. The job's never done,' he says.

'The success we've enjoyed over the past 10 years comparatively speaking has been good but what that does is create new challenges about how you maintain that dynamic change for the future. What we have to do all the time - and it's something other cities need to do - is constantly question, review and challenge how you improve economic performance.'

Fell points to the dangers of the success so far: 'The city has changed hugely over the past five years. The downside to this is that people who haven't been to the city for several years maintain their old perceptions of it. What's exciting about the Bank of New York, for instance, is that its perception of the city is as it is now.

'We need to bring people up to date with the development and the speed of change. I think there is the real danger that because the change has been so fast, the old perceptions could be damaging to our future growth.'

Manchester successfully hosted the 2002 Commonwealth Games, contributing to its international reputation. It was the largest multiple sports event ever held in the UK.

'I think the games helped Manchester change the perception of a lot of UK citizens about the city,' says Peter Fell, director of regional and economic affairs at the University of Manchester.

'Nothing was built for the games that didn't have a long-term use. It's the best concentration of sports centres in the UK,' Eamonn Boylan, deputy chief executive of Manchester City Council, told Accountancy.

Last month the great and the good of Manchester visited New York to celebrate the Bank of New York's decision to site its new securities servicing operation in the city. A reception took place at the British consul general, Sir Philip Thomas's residence.

So far the Bank of New York's Manchester operation employs 120 people, rising to 350 by summer 2006 and is projected to reach 750 over the next several years.

The centre provides services in global custody, settlement, and fund accounting.

'After 9/11 we became a big believer in the need for diversity of our operations,' commented Donald Monks, senior executive vice president of the Bank of New York, at the reception. 'The centre, among others around the world, will be key to the growth of our business,' he added.

Key to the decision to choose Manchester, which was on a final shortlist with Syracuse in New York, was a high degree of international capability, such as language skills; telecoms capability ('We are a technology company, in terms of the fact that the business of moving securities around the world requires robust systems,' says Monks); local infrastructure; and an enthusiastic and flexible workforce.

'The Bank of New York was so impressed with Manchester, that it wanted to bottle the atmosphere and take it to its other sites,' said Tim Newns, business development manager for financial services at Greater Manchester inward investment agency MIDAS.

The Bank of New York already employs 3,000 staff in the UK, with offices in London, Swindon, Liverpool and Edinburgh.

•    Manchester is the largest regional conurbation in the UK, with a population of over 3.2m in the city region, and a commuter population of 5.2m within 30 miles. 65% of the population are under the age of 45.

•    Manchester is the largest economic centre in the UK outside London and the South East. It contributes nearly £47bn to the total UK GVA (gross value added - an economic indicator).

•    Forecasts predict that growth will continue to exceed the UK average of 2.1%.

•    Over 200,000 people are employed in financial services, around 14% of the workforce. The number is predicted to grow by over 20% over the next 10 years.

•    Financial services-related salaries tend to be up to 35% less in Manchester than the South East and London for equally qualified and experienced professionals, and similarly competitive when compared with other major European cities with similar skills and financial services capabilities.

•    Over 10% of students graduating from the cities' universities are from business and finance-related degree courses.

•    Manchester's airport has direct daily flights to 200 destinations including 10 US airports and all major European cities.

•    London is only two hours by train and one hour by plane.

•    Average house prices are up to 55% lower than London.