A city will make your empire more powerful in general and it will lessen the management and organisation that your realm needs. 

A fully upgraded city will have the following enhancements: 
  • higher silver and copper capacity (2.000.000 pieces each)
  • better exchange rates for silver (silver 1:40)
  • shorter distance to the market from the keep (15 fields)
  • higher capacity for wood, stone and ore (560.000 each)
  • better base defence of the city wall (56.000)
  • higher defence bonus (150% for each unit type)
  • more available subjects (280.000/Battleworlds: 400.000)
  • new offensive bonus in the barracks (+30% for each unit type)
  • new speed bonus in the barracks (+20% speed for each unit type)
  • new capacity bonus in the harbor (+20% capacity for each unit type)
  • new mission bonus in the tavern quarter (+20% more resources for each mission)
  • New transport unit (Cog)
  • better resource production for wood, stone and ore 
  • even better resource production for wood, stone and ore (through research; +5% for each resource type)
  • the unit recruitment in a fully upgraded city is as fast as the combined speed of 5 regular fortresses put together.
  • a city is able to produce significantly more offensive or defensive power per hour in conjunction with its numerous offensive and defensive bonuses.

But beware: The city is not as powerful as the individual fortresses were just after it has been created. It must be upgraded in order to achieve its true potential.
Attention: All active banners will be taken down when the fortresses are merged into a city.