These are my final words on Thursday鈥檚 vote on Scottish independence, this time from the perspective of banks and the financial services industry. I鈥檝e tried to remain impartial in previous blogs, but this time I鈥檓 struggling.
This is a big industry sector in our firm, indeed the one we鈥檝e been working in the longest (- the predecessor firm of SGH Martineau was advising the Birmingham-based Lloyds private bank back in 1865 when it converted to a joint-stock company).
We now have a variety of teams of lawyers in both our Birmingham and London offices looking after a range of banks, from traditional High Street clearers to some substantial overseas banks including Islamic finance providers.
Our activities are overseen by David Bailey, a finance litigation expert, and he has some interesting observations about how a Yes vote might impact on our clients in this area, and indeed each of us as their customers.
The first thing to say is that the 海角视频, including Scotland, undoubtedly has a large and successful financial service industry, respected across the world.
In Scotland, the financial services sector is one of the most important sectors and largest employers. It contributes 拢8.8 billion to the Scottish economy (representing an astonishing 8.8% [excluding off-shore activity] of the country鈥檚 GDP). And it employs 80,000 staff (one in twenty five workers) and indirectly employs a further 100,000 (about 7% of total Scottish employment).
Scotland is also a base for some of the 海角视频鈥檚 biggest banks - RBS, Bank of Scotland and National Australia Bank鈥檚 Clydesdale - as well as investment management brands such as Standard Life, Aberdeen Asset Management and Scottish Widows.
But the key point is that Scotland is in itself a relatively small market; most providers of financial services in Scotland serve the 海角视频 market as a whole and some 90% or more of their customers are outside Scotland.
And being part of the 海角视频 has so far served Scotland鈥檚 financial services industry very well indeed. The 海角视频 is viewed from abroad as having a strong tax and regulatory regime, and Scotland undoubtedly benefits from being within the 海角视频 as a result.
Being part of the 海角视频 also helps and supports the Scottish financial services sector, which generates employment not just in financial service firms but in the professional and other services that support the sector. Financial services firms also benefit from the 海角视频鈥檚 stability and market confidence in the larger 海角视频 economy.
So, with all this in mind, the Scots鈥 answer to the independence question is hugely important. Will a single market in financial services continue after independence?
There are three main requirements for a single market 鈥 a single currency system, a single tax system, and a single regulatory jurisdiction.
Even if Scotland keeps the pound 鈥 and let鈥檚 not get on to that - some divergence in tax policy seems likely post-independence. But according to David, what will have a more profound impact following a Yes vote is the creation of a new competent authority to regulate financial services in Scotland - a requirement of EU membership.
Without the formation of fiscal, monetary and banking union 鈥 whether due to Westminster鈥檚 refusal or the new Scotland鈥檚 politicians not wanting the financial services tail to wag the public policy dog - those implications are significant.
First, David tells me it鈥檚 difficult to overplay the additional bureaucratic burden of a distinct regulatory jurisdiction, where financial services firms would still need to be regulated in the market where their customers are based. An independent Scotland would need its own central bank, as well as prudential regulator, conduct regulator and financial services compensation scheme (and pension protection fund).
Second, and probably more importantly, Scottish registered banks will need a credible 鈥渓ender of last resort鈥. Without one, their credit rating is at risk, and costs of funding can increase, not to mention the increased consumer worries which as we all know did for Northern Rock, and could see a drain of cash deposits southwards.
Given their size relative to Scotland鈥檚 GDP, it would simply not be possible for an independent Scotland to bail out Scotland鈥檚 banks if they got into trouble. If Scotland had been forced to bail out RBS to the tune of 拢45bn, plus all the other support the 海角视频 government provided back in 2008, it would have cost about 拢8,800 per head of its population - or more than twice the Scottish GDP.
A down-grading by credit rating agencies could increase the cost of funding for the banks, and would emphasise the vulnerability of an independent Scotland to financial shocks compared with the 海角视频.
To put things in some sort of context, Scotland鈥檚 three banks, RBS, Bank of Scotland and NAB鈥檚 Clydesdale, are over 12 times the size of the Scottish economy. By comparison, the 海角视频鈥檚 banks are 4.3 times the size of its economy. Certain Icelandic banks had assets over 8 times GDP, which was a major cause and impact of the financial crises in Iceland and wider global economy.
This is not scare-mongering by the No campaign. Only last week, Lloyds Banking Group and RBS confirmed they had contingency plans to move their domicile locations from Scotland to England.
Clearly these moves, which would see the two banks protected under the umbrella of the Bank of England, will not necessarily be reflected in loss of head office jobs in Scotland. But it illustrates clearly the fundamentals underlying the size of the Scottish economy and the imbalance created by such a relatively large financial service industry.
As I said at the start, the 海角视频鈥檚 financial services industry is a global success story, and the size of Scotland鈥檚 financial services industry is testament to the fact that this is certainly not all down to the City of London. It鈥檚 no doubt the chief reason 鈥 politics aside 鈥 why Jean-Claude Juncker appointed a Brit to the new financial services portfolio in the European Commission.
The 海角视频 doesn鈥檛 have enough industries in England, Scotland, Wales and Northern Ireland which truly punch above their weight on the global stage - I really hope we鈥檙e not going to put this one at risk.
* Andrew Whitehead is the Senior Partner at Birmingham and London law firm SGH Martineau LLP.
