Mark Carney has warned the Royal Bank of Scotland might have to move their headquarters to England if Scotland becomes independent and joins the European Union.
Carney cautioned that RBS, which is 81 per cent owned by the British government, and other Scottish-based financial firms may have to move after the 18 September referendum on Scottish independence.
Carney said if Scotland chose to break away from the rest of the UK, EU law stipulated it would need to guarantee deposits in England and Scotland where many have their largest customer bases.
Carney said: "It is not clear in the European context that the domicile of the major banks up in Scotland would remain in Scotland given the location of head office like activities in the rest of the UK.
"It's a distinct possibility but I shouldn't prejudge it. It depends on their arrangements as well."
Financial services account for 12.5 per cent of Scottish GDP and the sector employs around 150,000 people.