Banks repeat threat of moving head offices to England in case of 'Yes' vote.
The U.K. pound rose as new polls suggested the rise in support for Scottish independence may have stalled, and London-based media trumpeted threats by Scotland’s biggest financial services companies to move south of the border if Scots do vote Yes to independence on Sept. 18.
A poll by the firm Survation showed a 53%-47% lead for opponents of independence as of Aug. 28, directly after the second of two televised debates between the campaign leaders. That excluded around 11% of respondents who were “Don’t Know’s.”
The poll is older than the one that grabbed attention at the weekend by showing the Yes vote in the lead for the first time, and doesn’t incorporate an apparent late surge in support for independence since those debates.
However, the lead for the No camp is no smaller than in Survation’s poll from the start of August, suggesting that the actual shift in opinion may not be as great as the hype around the weekend poll estimated. The pound rose half a cent to $1.6260 initially, but later gave back some of its gains.
The atmosphere around the referendum has become febrile, with U.K. politicians led by Prime Minister David Cameron staging a stilted and desperate last-minute campaign to persuade Scots to vote ‘No’.
Scotland’s two largest banks, Royal Bank of Scotland PLC and Lloyds Banking Group PLC, both reaffirmed Thursday that they would move their official headquarters to London in the case of a Yes vote.
RBS’s statement made clear that it expected its borrowing costs to rise as a result of its credit rating being downgraded unless it had the implicit backing of the U.K. government.
Lloyds, in turn, said: “While the scale of potential change is currently unclear, we have contingency plans in place which include the establishment of new principal legal entities in England.”
U.K. taxpayers own 81% of RBS and 25% of Lloyds after bailing them out for a combined $100 billion in 2008-9. Both banks also profit from their unlimited access to liquidity from the Bank of England, which could come under threat if, as all the main parties claim, the remainder of the U.K. refused to share a currency with an independent Scotland.
Both banks argued that their contingency plans were primarily technical steps that would have no effect on their customers, or on their Edinburgh-based head offices which provide thousands of well-paid jobs to the Scottish economy.
Investors, however, continue to fret about the huge upheavals that separation would cause.
“The UK and Scotland could be plunged into a huge pool of uncertainty, as the negotiations that follow will undoubtedly be messy, and potentially damaging for the reputation of both countries,” said Azad Zangana, European Economist with fund manager Schroders.