Exclusive - Lloyds could move south if Scots vote for independence

LONDON Tue Sep 2, 2014 6:17pm BST

The signage is seen at a branch of Lloyds bank in central London February 13, 2014. REUTERS/Paul Hackett

The signage is seen at a branch of Lloyds bank in central London February 13, 2014.

Credit: Reuters/Paul Hackett

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LONDON (Reuters) - Lloyds Banking Group is considering having its registered office in London rather than Edinburgh should Scots vote for independence, banking industry sources told Reuters.

Lloyds, which owns Bank of Scotland, has finalised contingency planning ahead of the Sept. 18 vote. The chances of secession have increased with support for Scottish independence rising dramatically in August.

Banking industry sources said Lloyds executives are considering having the group's registered office in London, with Bank of Scotland operating from Edinburgh as a foreign division of the business.

Most of Lloyds' senior executives are based at the company's headquarters in London but the bank's registered office, its official legal address, is in Edinburgh, meaning it would be classed as a Scottish bank in the event of independence.

Lloyds has warned that Scottish independence would impact its cost of funding, taxes and compliance costs.

Scottish-based banks have assets worth 12-and-a-half times the country's economic output and economists have questioned whether an independent Scotland would be big enough to host Lloyds and rival Royal Bank of Scotland.

If Lloyds were to stay in Scotland after it becomes independent, Westminster-based lawmakers have warned that the Bank of England would no longer be the so-called lender of last resort, to provide a backstop were Lloyds to run into trouble.

Lloyds required a 20.5 billion pound bailout during the 2008 financial crisis, which left the British government with a 40 percent stake.

The bank, which is now 25 percent government-owned, has stressed that it will not make any decisions until after the result is known. It has said that in the event of a vote for independence it will work with relevant authorities to ensure it can serve customers across the United Kingdom.


"The scale of potential change is currently unclear, but we have contingency plans in place," Lloyds told Reuters on Tuesday in an emailed statement.

"In the event of a 'yes' vote in the referendum, there would be no immediate changes or issues which could affect our business or our customers. There will be a period between the referendum and the implementation of separation, should a 'yes' vote be successful, that we believe is sufficient to take any actions that we believe necessary," Lloyds said.

Scotland's First Minister Alex Salmond has said the country would officially become independent in March 2016 in the event of a 'yes' vote, giving Lloyds and Royal Bank of Scotland 18 months to assess their options.

During the intervening period, politicians on both sides of the border would negotiate key questions including whether Scotland can keep the pound.

The three main UK parties have ruled out a currency union but Salmond has insisted they would negotiate if Scots vote for independence and has said no one could stop Scotland using the pound informally.

Some banking industry and political sources say the 18 month timeframe for independence could prove overly optimistic, meaning Lloyds and RBS could have more time to respond.

The sources said Lloyds and RBS have held discussions with the Bank of England over what might happen in the immediate aftermath of a 'yes' vote. Some executives want the Bank of England to reiterate that it will continue to act as lender of last resort during the transition period and calm any fears among investors and depositors.

The Prudential Regulation Authority, which has responsibility for financial stability, declined to comment.

Britain's finance ministry declined to comment.

RBS, whose registered offices are also in Edinburgh, declined to comment on its plans.

Representatives of "Yes Scotland", which is campaigning for independence, were not immediately available for comment.

(Editing by David Clarke)

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Comments (8)
Scotia14 wrote:
This simply confirms that the main reason the Government cites, about not wanting a currency union with Scotland, is the disproportionate size of the Banking Sector relative to the economy, will be an irrelevance.

Both RBS and Lloyds Banking Groups are preparing contingency plans in the event of a Yes vote and some of the Head Offices, for the Banks primarily operating in England are or will be transferred to London.

The markets know this, hence the pressure on the Bank of England to confirm that the UK is liable for all debt under any circumstances and have had to prepare contingency plans for a Yes vote. They now want clarity on Sterling, due to the impact on the balance of payments, as an Independent Scotland would have a £30 Billion Sterling balance of payments surplus. I suspect the markets and City see no reason for objecting to a currency union, as this threatens Scotland walking away from UK debt if a currency union can’t be agreed as this is not an equitable share of assets and liabilities. Sterling has been built up into a major currency over many years, with all of the Home Countries playing their part in this. Scotland views Sterling as a goodwill asset and wants to continue sharing this.

This political tactic, conceived by Alistair Darling and adopted by Better Together, is backfiring, as Alex Salmond and the Electorate consider this is nothing more than a bluff to try and win the Referendum.

Sep 02, 2014 7:27pm BST  --  Report as abuse
ektope wrote:
This is another form of blackmail by the English to keep their colony!

Sep 02, 2014 10:45pm BST  --  Report as abuse
WalesUK2014 wrote:
ektope that’s a joke right? The UK had to bail out Lloyds bank and Lloyds knows that if it needs bailing out again an independent Scotland could not afford to do it. We also had to bail out the Royal Bank of Scotland, and £14 billion to bail the Ulster from the Republic of Ireland, and both of those banks are owned by Lloyds group.

Sep 02, 2014 12:03am BST  --  Report as abuse
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