City's financial institution agreed to accept grand (7)
I believe the answer is:
bangkok
'city's' is the definition.
(Bangkok is an example)
'financial institution agreed to accept grand' is the wordplay.
'financial institution' becomes 'bank' (bank is a kind of financial institution).
'agreed' becomes 'ok' (e.g. when responding to offer).
'to accept' means one lot of letters goes inside another.
'grand' becomes 'g' ('G' can be a synonym of 'grand').
'bank'+'ok'='bankok'
'bankok' enclosing 'g' is 'BANGKOK'.
(Other definitions for bangkok that I've seen before include "Far Eastern capital" , "City" , "Thai capital" , "Capital of Thailand" , "Asian capital" .)