‘RBS may have to move to England’

The Royal Bank of Scotland and other Scottish-based financial firms might have to move their headquarters to England if Scotland becomes independent and joins the EU, Bank of England governor Mark Carney said yesterday.

Mr Carney said if Scotland chose to break away from the rest of the UK at a September 18 referendum, EU law stipulated it would need to guarantee deposits in England and Scotland where many have their largest customer bases.

Scotland is home to the second-largest financial services industry in the UK, accounting for about 150,000 jobs and making up about 12.5% of Scottish GDP.

“It is not clear in the European context that the domicile of the major banks up in Scotland would remain in Scotland given the location of head office like activities in the rest of the UK,” Mr Carney told MPs in a parliamentary committee.

He said RBS, which is 81% owned by the British government, may have to move.

“It’s a distinct possibility but I shouldn’t prejudge it. It depends on their arrangements as well,” he said.

Insurance firm Standard Life and investment manager Alliance Trust have already started setting up some companies based in England in a precautionary move because of uncertainty over tax, regulation, currency and EU membership should Scotland end its 307-year tie with England.

A row over what currency would be used in an independent Scotland has exacerbated worries among businesses.

The main UK political parties have rejected Scottish leader Alex Salmond’s plan to share the pound in a currency union with Scotland and keep the Bank of England as the lender of last resort.

Mr Carney said any “informal adoption of sterling” by an independent Scotland without a currency union would mean it lost the lender of last resort facilities of the Bank of England.