RBS risks an Iceland-style crisis if Scots pick self-rule, warns Vince Cable

Business Secretary says bank would have to move HQ to England or 'face instability'

Royal Bank of Scotland would be left more exposed than Iceland's banks at the height of their financial crisis if Scotland votes for self-rule, Vince Cable, told The Independent.

The Business Secretary said that the balance sheet of Edinburgh-based RBS would be 10-12 times bigger than the Scottish economy under some estimates. Mr Cable added that it would be logical for the bank's headquarters to be in the established regulatory regime of what remained of the UK, rather than risk the "inherent instability" of running the business under a new framework north of the border.

"If you're a manager of an RBS you would want to be absolutely sure that you enjoyed a satisfactory regulatory system," said Mr Cable. "And it is very likely that you would want to migrate to a centre where much of your business is."

He was speaking after he gave evidence to MPs yesterday over the impact of independence on British business, where he said that RBS would "inevitably become London-bound" if Scotland adopted a separate currency. This would be a "symbolically important" move for a bank that traces its Scottish lineage back to the early 1700s.

The Business Secretary does not believe that a monetary union is possible or desirable either side of the border if the "yes" votes win the September poll, even though that is the Scottish National Party's preferred option. However, Mr Cable said that there would still be problems if a new currency was adopted, including that it would act as a "barrier to trade" with the rest of the UK in its early days .

The currency would also suffer from exchange rate fluctuations at first, which would damage a country that is "very dependent on raw materials" such as North Sea oil and gas.

"The best option for Scottish business would be that they remain in the UK," argued Mr Cable. The Commons Select Committee hearing came in the same week that BP's chief executive, Bob Dudley, became the most significant business leader to wade into the debate on independence. He warned that Scotland should not run the risk of "drifting away".

Mr Cable said those remarks added weight to the arguments of those who oppose independence as Mr Dudley is "clearly not talking about this from a tribal point of view – he's American".

There have been criticisms that big business has previously kept out of the debate over the impact of independence, with some even joking that "we're in the odd position of being reverse lobbied" by both the "yes" and "no" camps. BAE Systems' chief executive, Ian King, has claimed that he has not developed a contingency plan for any political changes, despite building ships on the river Clyde for the Ministry of Defence.

Ann McKechin, the Labour MP for Glasgow North, who sits on the Commons Business Committee, told The Independent: "The fact that BP has said something will give other corporates the confidence to speak out and tell people what the consequences are for shareholders and staff."

Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Life and Style
Mark's crab tarts are just the right size
food + drinkMark Hix cooks up some snacks that pack a punch
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect