RBS, Lloyds plan to move after Scottish Yes vote

LONDON: Scotland's financial-services industry is threatening to head for the border, with Royal Bank of Scotland and Lloyds Banking saying they plan to move to England if the country votes for independence.
Lloyds said in a statement late Wednesday that it already has a contingency plan for establishing new legal entities in England in the event of a Yes vote, while RBS said Thursday that such an outcome would make it necessary to re-domicile the headquarters.
In the event of a Yes vote, there are "a number of material uncertainties arising" from the referendum that could impact RBS's credit ratings as well as the "fiscal, monetary, legal and regulatory landscape to which it's subject," the bank said in the statement. "RBS believes that this is the responsible and prudent thing to do and something that its customers, staff and shareholders would expect it to do."
RBS and Lloyds, which both received a government bailout in 2008, are the two biggest lenders in Scotland. They join National Australia Bank's Clydesdale Bank and Standard Life, Scotland's largest insurer, which have said they've made contingency plans to move parts of their businesses to England if it votes Yes. The chief executive officers of BP and Kingfisher have also spoken out in favor of a united Britain.
RBS and Lloyds may decide to re-domicile even if Scotland votes against independence, bank analysts said, citing the precedent of Bank of Montreal to move to Toronto in the 1970s amid the rise of Quebec separatism, which was ultimately defeated.
Rather than risk perpetual uncertainty over Scotland's future, "the banks would want to kick off the relocation process irrespective of the decision," said Chirantan Barua, an analyst at Sanford C. Bernstein in London. The risk has become "irreversible," with a move costing the banks as much as 1 billion pounds ($1.6 billion) each, he estimated.
Lloyds said in the statement it has seen an "increased level of inquiries" from customers regarding contingency plans, adding that there would be enough time to "take necessary action" should voters say Yes.
"Lloyds's contingency plan to relocate to London in the event of a Yes vote is understandable," a Treasury spokesman said in a statement. "Any company should be free to choose where to locate its base, in the light of what best suits the stability and competitiveness of its business."
RBS and Lloyds want the government to introduce new legislation to help speed up the process of moving their headquarters to England in the event of a Yes vote, according to two people with knowledge of the matter. The process could take as long as 18 months under current laws, said one of the people, who asked not to be identified because they are not authorized to speak. Sky News reported the move earlier Thursday.
Scottish First Minister Alex Salmond said Thursday in an interview on BBC Radio Scotland that the release of the news on the banks relocating was a "political gambit" and wouldn't affect operations and jobs.
Officials at the pro-union Better Together didn't reply to telephone calls and e-mails seeking comment.
One in eight people in the Scottish capital work in the finance industry. RBS, which has roots in Scotland dating to 1727, has a 350 million-pound, 120-acre campus on the outskirts of Edinburgh with capacity for 3,250 staff.
Characteristic of its dual identity, the headquarters has two automated teller machines for staff: One that dispenses Bank of England notes and one stocked with their Scottish counterparts. RBS employs about 12,000 people in the country, while Lloyds has some 16,000 staff.
"The issue could come back again in future years, so it's entirely conceivable that in due course you'll see the banks switching their registration to England," even if there's a No vote, said Ian Gordon, an analyst at Investec in London.
RBS, 80 percent owned by the British government, and Lloyds shares have fallen since a weekend poll showed the Yes vote leading for the first time in the Sept. 18 referendum, as uncertainties were reignited about customers withdrawing deposits, Scotland's future currency, the future regulatory environment and the lack of a central bank.
Bank of England Gov. Mark Carney told British lawmakers Wednesday assets in the Scottish-domiciled financial industry are about 10 times Scottish gross domestic product, totaling more than 1 trillion pounds. He added that a Scottish central bank without control of the sterling currency wouldn't be a credible lender of last resort, leaving open the prospect banks based there could fail, taking depositors money with them.