RBS and Lloyds Surge as Scotland Votes to Stay in U.K.


Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc (LLOY) rallied after Scots voted to stay in the U.K., avoiding months of turmoil that may have seen the lenders move to England.

About 55 percent of voters rejected independence, exceeding the “no” side’s polling lead in the last days of the campaign. RBS (RBS) jumped 3.1 percent to 368.3 pence at 8:33 a.m. in London trading, extending its weekly gain to 5.3 percent. Lloyds gained 1.9 percent to 77.30 pence, and TSB Banking Group Plc (TSB) climbed 3 percent to 295 pence. The British pound also surged.

Contingency plans to move to England are “no longer required,” RBS said in a statement today. RBS and Lloyds, both domiciled in Edinburgh, said last week they would move to England if Scots chose to dissolve the 307-year-old union. Analysts estimated a move south may have cost each lender as much as 1 billion pounds ($1.6 billion).

“It is business as usual for all our customers across the U.K.,” RBS said in an e-mailed statement.

Lloyds said it remains focused on supporting households and businesses in Scotland and the rest of the U.K.

It was RBS’s biggest share gain since it reported first-half profit almost doubled on July 25. RBS and Lloyds, which received government bailouts in 2008, are the two biggest lenders in Scotland and employ about 11,500 people and 16,000 people in the country respectively.

TSB and Standard Life Plc (SL/), Scotland’s largest insurer, also said they had contingency plans to move parts of their businesses to England in the event of a “yes” vote.

Constitutional Change

“U.K. investors will welcome a reduction in the uncertainty of recent months,” Aberdeen Asset Management Plc (ADN) Chief Executive Officer Martin Gilbert said in an e-mailed statement. Aberdeen’s shares climbed 1.1 percent.

After a record turnout of more than 90 percent in some Scottish regions, U.K. Prime Minister David Cameron reiterated a pledge for enhanced powers for the Scottish Parliament. He also said that would be matched by cutting the influence of Scottish lawmakers sitting in the House of Commons in London.

Standard Life said it will consider the implications of any changes for customers and stakeholders, and expects further constitutional changes. Its stock gained 1.8 percent to 423.3 pence, extending its weekly gain to 3.1 percent.

A split would have seen months of negotiations, including a clash over what currency an independent Scotland would have used.

The banks may still opt to move their legal headquarters to London in coming years to remove the risks associated with any future referendum, some analysts say.

“Fears over the dislocation caused by a Yes vote and the distractions of another corporate reshuffle at each bank has not gone away,” Chris Wheeler, a London-based analyst at Mediobanca SpA who has a neutral rating on RBS shares, said in a note today. “We sense that the two banks will become re-domiciled south of the border in any event, given the prospects of a demand for another referendum in the medium term. They will now just have a less frenetic timetable to achieve it.”


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