RBS would leave Scotland in case of independence

Staff Writer
Columbus CEO

LONDON (AP) — In a blow to the Scottish independence campaign, top financial groups including the Royal Bank of Scotland and Lloyds Banking Group say they will move headquarters to England should Scots vote to break away from the United Kingdom.

RBS, which has been based in Scotland since 1727, said Thursday it has drawn up contingency plans because of uncertainties that could hurt its business and customers should Scots vote to become independent next week. Lloyds Banking Group, which owns Halifax and Bank of Scotland, also said it had plans to set up new "legal entities" in England if the Yes campaign succeeds.

The banks' moves raise questions over an independent Scotland's ability to retain businesses, particularly during the months of financial uncertainty that would follow a vote to break away. Scotland would, among other things, have to figure out what currency to use and how much U.K. public debt to take on.

"There are a number of material uncertainties arising from the Scottish referendum vote which could have a bearing on the bank's credit ratings, and the fiscal, monetary, legal and regulatory landscape to which it is subject," RBS said in a statement.

Despite its name, RBS is currently majority-owned by the taxpayers of the entire U.K. since it needed a government bailout in 2008 to make up for bad investment decisions. It has operations throughout the U.K. and foreign countries, but its relocation would be a symbolic blow to an independent Scotland. The U.K. government also owns a significant share of Lloyds.

The latest polls suggest that an independent Scotland — until recently dismissed as a highly unlikely outcome — could become a possibility as the independence campaign gains momentum ahead of the Sept. 18 referendum.

That has sent jitters through the markets, prompting investors to sell off the British pound. The pro-independence Yes campaign argues that Scotland could sustain itself economically, but their opponents — including many businesses in Scotland — have focused on the uncertainties, particularly what currency the Scots would use.

RBS, a key employer in Scotland and a symbol of its financial sector, said it would be necessary to re-domicile its holding company and its main operating entity, the Royal Bank of Scotland PLC, to England.

Both Lloyds and RBS said the potential changes were legal procedures that would not impact their operations and jobs in Scotland.

The smaller Clydesdale Bank also announced similar plans to relocate south of the border to mitigate risks.

The financial group Standard Life earlier said it was ready to move parts of its business to England in case of independence. Precautionary measures include transferring pensions, investments and other long-term savings to new companies to ensure they remain part of Britain's currency and tax regime.

Scotland's leading politician, Alex Salmond, denied that the confusion over what currency an independent Scotland would use was causing uncertainty in the financial markets.

Instead he shifted blame on the British government, saying it was being unreasonable in refusing to come to an agreement on a common currency with Scotland.