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."
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