There are other tell-tale signs of a shift in power: this year's two biggest initial public offerings after Facebook were launched not in the United States or Europe, but in Malaysia.

Yet perhaps what is more striking is that, with one or two exceptions, Asian financial firms are not doing more in Europe itself to capitalize on the euro zone's festering debt and banking crisis.

Take China. The economy has more than doubled in size in five years. It has some of the biggest banks in the world. And its appetite for snapping up natural resources is undiminished: witness last month's $15.1 billion agreement by state oil company CNOOC Ltd to buy Canada's Nexen Inc, the biggest foreign acquisition to date by a Chinese company.

When it comes to the financial sector, however, the glass is half-empty, not half-full, said Andre Loesekrug-Pietri, chairman of A Capital, a China-Europe investment fund.

"There's a front-cover story every other month about China buying up the world, but China is still a very small player in international M&A," he said.

WAITING GAME

David Marsh, co-founder of a forum in London that connects central banks and sovereign wealth funds with banks and asset managers, said the West no longer had a monopoly on innovation and dynamism in financial services.

But China was playing a long game, biding its time and waiting for bargains. With plenty of bankers and traders being made redundant, Chinese firms have the chance gradually to build up teams and expertise rather than making giant acquisitions.

"They'll be much more clever than simply buying moribund banks at high prices: they'll be buying people," Marsh said.

"What we're seeing now is just the precursor of a much bigger shift that will take place over the next 10 years, but it won't happen in one fell swoop."

China has not been completely asleep on the acquisitions front.

Two Chinese private equity funds are on the final shortlist of bidders for the asset management arm of Franco-Belgian financial group Dexia, a deal that could be worth 500 million euros or more.

And CITIC Securities has agreed to buy CLSA Asia-Pacific Markets, a highly regarded Hong Kong-based brokerage, from its French parent, Credit Agricole SA, in a two-stage transaction worth $1.25 billion.

The deal is symbolic. Whereas CITIC is China's biggest brokerage, Credit Agricole is battling mounting losses in Greece, the epicenter of the euro zone crisis, where it owns the country's sixth-largest bank, Emporiki.

"Distressed banks selling good assets always happens in a crisis like this. Banks which don't want to raise capital by issuing new equity end up selling their offshore assets, and typically they sell the crown jewels," said Ken Courtis, founding partner of Themes Investment Management and a former vice-chairman of Goldman Sachs Asia.

A clutch of other European financial institutions is also beating the retreat in Asia.

Britain's Royal Bank of Scotland has offloaded some of its Asia-Pacific investment banking operations to Malaysia's CIMB Group Holdings Bhd, while ING is selling its $7 billion Asia insurance business. Both banks had to be bailed out by their governments during the crisis.

Integrating independent-minded CLSA would be one of the biggest challenges for CITIC, Courtis said. Chinese financial institutions in general have a narrow bench of executives with the right linguistic and overseas management expertise - one reason why they are initially beefing up their offshore presence in more-or-less familiar Hong Kong, he said.

"They don't have a lot of people who have experience managing big international pools of capital," Courtis said. "So they will do this step by step. We'll continue to see them move ahead slowly."

BURNED FINGERS

Underscoring that cautious approach, Bank of China said last month it was ending a four-year foray into Swiss private banking and transferring under 1 billion Swiss francs in assets to Julius Baer under a pact to refer clients to each other.

One reason why China is treading carefully is that it its sovereign wealth fund made big paper losses when it bought stakes in fund manager Blackstone and investment bank Morgan Stanley before the financial crisis broke.

Ping An Insurance, China's second-largest insurer, lost about $3 billion on its 2007 investment in Belgian-Dutch Fortis, which foundered during the credit crunch.

Chastened, the authorities in Beijing blocked several other financial deals as too risky, including a proposal by Bank of China to buy 20 percent of French private bank La Compagnie Financiere Edmond de Rothschild.

"Today we don't have so much support from the government to do financial services M&A," said A Capital's Loesekrug-Pietri.

According to figures compiled by Rhodium Group, a New York consultancy, China invested $526 million in financial services and insurance in the European Union between 2000 and 2011, just 2.5 percent of the country's total direct investment in the 27-nation bloc over that period.

But that sum includes only two mergers and acquisitions, valued at $31 million. The rest of the investment was in the form of "greenfield" projects, such as setting up new offices.

London's ambitions to become a hub for trading the yuan, together with Chinese corporations' growing presence in Europe, should ensure plenty of opportunities for further organic expansion whether takeovers eventually flourish or not.

"We increasingly see Chinese service providers following their domestic clients abroad to provide support with overseas operations. Chinese banks, now present in all major European markets, are an example," Rhodium said in a recent report.

(Editing by Catherine Evans)

• A Permanent Economic Emergency