Scotland’s Two Biggest Banks Warn About Impact of Independence


Lloyds Banking Group, Royal Bank of Scotland May Move Headquarters to London From Edinburgh on ‘Yes’ Vote


Max Colchester

LONDON—Scotland’s two biggest banks are joining a growing chorus of businesses warning about the impact of the breakup of the U.K.’s more than 300 year-old union.

Lloyds Banking Group LLOY.LN +1.01% PLC said Wednesday it would move the bank’s legal headquarters to London from Edinburgh in the event of a “Yes” vote for Scottish independence on Sept. 18.

Royal Bank of Scotland Group RBS.LN +0.99% PLC made a similar announcement Thursday, saying it would register its legal headquarters in England if Scotland votes for independence.

The twin announcements from the two partially state-owned banks come as the U.K. government’s “No” campaign kicks into over drive in the lead up to next weeks vote.

Lloyds, which is 25% owned by the U.K. government, said in a statement it had seen an increased level of enquiries from customers about the bank’s plans after the vote. “While the scale of potential change is currently unclear, we have contingency plans in place which include the establishment of new principal legal entities in England,” the bank said.

RBS, which is 80% owned by the U.K. government, said, “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.”

National Australia Bank Ltd. NAB.AU -0.38% on Thursday joined Scotland’s two main major banks, saying it would shift south of the border should Scotland vote for independence in a referendum next week. Registering its Clydesdale Bank subsidiary in England would address some of the uncertainties and risks that surround separation if Scotland leaves the U.K., NAB Chief Executive Andrew Thorburn said in a statement.

Tesco TSCO.LN -0.75% PLC’s Edinburgh-based banking arm also said it plans to move its headquarters to England if Scotland votes in favor of independence.

Investors are fretting about the future of Scotland as polls show a surge of enthusiasm for independence. If Scotland breaks away from the U.K., it remains unclear if it would keep the pound, remain in the European Union and how its sizable financial services industry would be regulated or bailed out in a crisis.

In a statement, the U.K. Treasury said that the plans to relocate to London in the event of a “yes” vote were “understandable.”

“As a general matter, the Government believes 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,” the U.K. Treasury said in a statement.

The move comes after several high profile businesses warned of the dangers of breaking the old union.

The Fight for Scotland

On Wednesday, BP PLC Chief Executive Bob Dudley said the future of Scotland’s North Sea oil industry would be “best served by maintaining the existing capacity and integrity of the United Kingdom.” Meanwhile insurer and fund manager Standard Life SL.LN +1.30% PLC ruled out keeping its main business in an independent Scotland if the country votes to split with the U.K. on Sept. 18.

The move to London would be particularly traumatic for RBS, which traces its Scottish heritage to 1727 and has a significant business in the region. The bank employs thousands of people at its sprawling headquarters on the outskirts of Edinburgh and has ads dotted around the town stating “This Is Home.”

For Lloyds, the presence in Scotland is less symbolic. The bank moved its headquarters north of the border when it merged with mortgage lenderHBOS at the height of the 2008 financial crisis, a deal which nearly brought the bank to its knees. Lloyds does have a bigger exposure to Scotland than RBS, however. Some 3.7% of the bank’s assets are north of the border, compared with 1.4% at RBS, according to Credit Suisse CSGN.VX -0.39% analysts.

Advisers to Scottish nationalists have, in the past, played down the importance of having the two of the U.K.’s largest banks leave Scotland, saying the banks are already run out of offices in London. However, analysts have said there could be repercussions on both jobs and future tax revenues for Scotland should the two banks leave the country.

—Rory Gallivan contributed to this article.



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