AS I SEE IT: Terry Murden says independence may be a smokescreen for the bank’s relocation, but the threat should not be treated lightly
NatWest RBS chief executive Alison Rose caused a flurry of headlines after stating that the bank’s headquarters would move to London if Scotland became an independent country. This may have come as a surprise to some (it made the splash in the Scottish Daily Express) but this is a long held policy first declared ahead of the referendum in 2014 by former chairman Sir Philip Hampton when the crash of 2008 was still fresh in the memory and there were concerns that Scotland would not be able to mount the sort of rescue that kept it afloat.
What Ms Rose did not mention was there have been two notable changes in circumstances since then – the bank’s shrinkage and the fact that it has been run from London for the past decade.
In 2008 the bank had a balance sheet of £2.4 trillion, almost double Britain’s economic output at the time. When Sir Philip made his own headlines on the subject in an address to customers and the media at the Dovecot Studios in Edinburgh, RBS (as it was then) was on its way to massively scaling back its operations.
Over the decade since the crash it sold £1.6 trillion of assets – equivalent to the economic output of Brazil. They included a fleet of aircraft in Beijing and the largest hospital in Sydney, to a golf course in Florida and a graveyard in the US Deep South.
The bank had been the biggest lender in the world, but by 2018 it was ranked fourteenth in Europe in terms of total assets. The question left unanswered by Ms Rose is why other smaller independent countries can sustain their own banks, yet Scotland could not.
The Netherlands supports ING (11th biggest in Europe) and Rabobank (19th). Norway has 122 banks and 12 branches and subsidiaries of foreign banks. Its biggest is DNB Bank which in recent years had assets of about £250 billion.
Claims by Ms Rose and her predecessors that NatWest/RBS could be forced south by independence are sounding a little hollow when confirmation of it becoming an England-headquartered institution would merely conclude a process that began in the wake of the crash.
Stephen Hester, who replaced Fred Goodwin as CEO chose to live in London’s swanky Holland Park and his successor Ross McEwan was also an Edinburgh visitor rather than a resident. The current CEO Alison Rosehas a contract that states she will be based in London rather than Edinburgh.
Goodwin may have been demonised following the bank’s near-collapse, but he was loyal to RBS and to Scotland. Critics saw his sprawling Gogarburn headquarters as the height of self-aggrandisement, but it was a statement of the bank’s Scottish roots and his plan to build a corporate giant in Scotland. At the time he was applauded for his ambitions.
His successors, on the other hand, have been busy dismantling his empire, and delivered a humiliating blow by rebranding it NatWest, even though the name means little in Scotland where it has a solitary branch.
There is a hugely important implication in formally switching the head office. Some have brushed it off as nothing more than a brass plate exercise. But re-registering as an English company would also mean continuing to pay its taxes to the Treasury in London, rather than to an Edinburgh-based collector. That would leave another big hole in an independent Scotland’s finances. Whatever really motivates NatWest’s plans, those waving the Saltire ahead of next week’s election should think about this potential hole, and how they propose to fill it.
Terry Murden formerly held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business