16:16 PM, 11th June 2014, About 8 years ago 14
Scotland’s big three banks RBS, Bank of Scotland and Clydesdale are over 12 times in value the size of the total Scottish economy, where as currently UK banks are just over 4 times the size of the economy.
In practical terms that would mean if Scotland were to vote for independence they would not be able to guarantee or bail their banks out if we had another banking crisis.
Does that mean if banks could no longer count on the Bank of England as the lender of last resort they would leave the country?
I don’t honestly know, but would you deposit your savings knowing they would not be guaranteed in the event of something similar happening. I suspect not and this is only where the problems start. Their cost of borrowing could also increase as it is likely their credit rating would be down graded, because of the smaller economy.
Reuters have reported from several banking sources that RBS, and part nationalised Lloyds Banking group which owns Bank of Scotland based in Edinburgh, have started drawing up contingency plans in the event of a Yes for independence vote on the 18th of September.
Vince Cable the UKs business secretary has already stated that he believes RBS would move its HQ from Edinburgh to London.
Scottish Nationalists have said they would like to keep the pound in a currency union along with British backing for its banks if the Bank of England were to retain monetary control. However David Cameron has already said that this would be extremely difficult – meaning unlikely.
Reuters figures also suggest that the British tax payer bail out of RBS in 2008 would have cost every member of Scotland’s population £8,800.
So the question is what would happen to the BTL industry in Scotland. Would you be able to remortgage a BTL property, would there be any new BTL loans to make purchases and is it possible Banks south of the boarded would try to call in existing loans.
These questions may all be at the worst case scenario end of the spectrum, but I don’t see much evidence at the moment of anyone asking them.
I am a concerned half Scot (family from Aberdeen) that is not allowed to vote.