After trying to stay above the fray all year, Royal Bank of Scotland plc (RBS) Friday finally warned Scots about the dangers of voting for independence, saying it could have a disastrous effect on the bank.
The Edinburgh-based bank, which was bailed out by the U.K. government in 2008 at a cost of 46 billion pounds ($78 billion), warned that a “Yes” vote for independence in a referendum next month “would be likely to significantly impact the Group’s credit ratings and could also impact the fiscal, monetary, legal and regulatory landscape to which the Group is subject.”
In other words, the biggest bank in an independent Scotland would find it more expensive to borrow and lend because a Scottish government couldn’t provide the same kind of backing that it has had from London, and would no longer have the automatic right to use sterling.
In addition, it warned, independence “may also affect Scotland’s status in the E.U.,” meaning that it would not be competing on equal terms in the E.U.’s single market.
“Any of the impacts above could significantly impact the Group’s costs and would have a material adverse effect on the Group’s business, financial condition, results of operations and prospects,” RBS said.
Its warnings are likely to be an embarrassment for the pro-independence Scottish Nationalist Party, which runs the devolved parliament in Edinburgh. Alex Salmond, Scotland’s fiercely pro-independence first minister, was an RBS employee for seven years.
The SNP has dismissed similar statements as scaremongering when they have come from England, but has struggled to articulate a convincing response when the same fears are expressed by its own financial sector, which is one of the country’s largest employers.
It has routinely denied claims that it would be forced to give up sterling, despite opinion polls showing over two-thirds of the English population against sharing the pound with an independent Scotland.
RBS isn’t the first big Scottish business to warn about the risks of independence. Standard Life Plc, one of the U.K.’s largest insurers, has also warned it might have to move its headquarters, along with thousands of well-paid jobs, from Edinburgh to England.
Scotland is due to vote on independence on September 18. Although opinion polls have consistently shown a majority against independence, the difference between the two camps has narrowed in the course of the year. Three polls in July gave the “No” camp an average lead of 9%, but showed as many as 27% were still undecided.
The Scottish government wasn’t immediately able to respond to RBS’s warnings Friday.