Standard Life becomes the latest firm to bully Scotland. But is it bluffing?

27 February 2014

No-one should be surprised that Standard Life has warned it might leave Scotland should the country vote for independence later this year. It is not exactly a secret that Edinburgh’s financial services industry is concerned by the possible – indeed plausible – implications of independence.

The suggestion – sorry, the threat – that it might leave Scotland is already being characterised by nationalists as yet more bullying, this time of the corporate rather than political kind. No doubt this is a blustering bluff too. 

But what if it isn’t? The sorry truth is that Edinburgh’s financial sector is not quite what once it was. The Bank of Scotland is a small part of the Lloyd’s group. So is Scottish Widows. Standard Life, being listed on the London stock exchange, is less of a Scottish company than it used to be. As for the Royal Bank of Scotland, it is these days largely a Scottish company in name only. This is not simply because the British government is its majority shareholder but more a reflection of the fact – sorry or inconvenient as it may be – that the bank no longer feels any great allegiance to, or belonging in, Scotland.

RBS is, to a very great extent, run from London these days. Even if the government sold its stake it seems improbable that real power will ever return to Edinburgh. Ross McEwan, the newish chief executive, rarely ventures north. The bank remains – properly you may say – chastened by its near-death experience. Even so, there is something melancholy about its retreat, something sad about the narrowing of its horizons and the limiting of its ambitions.

One of the things Iain Martin’s splendid, merry, romp through RBS’s disaster made clear was the extent to which RBS’s rise was fuelled by a certain kind of nationalism. George Mathewson and his colleagues wanted to make a statement: a Scottish company, a Scottish bank could become a global player. The company would not be limited by its supposedly humble, even provincial, location and history. It would show the world that a Scottish bank could be quite something. I suppose they succeeded.

But today’s RBS feels little such loyalty to Scotland. It is no longer run by Scots. If the bank survives – which is not altogether certain even now – it will survive as a Scottish bank in name alone. It is not difficult to find RBS executives who assume the bank will move to London and that it may do so whether Scots vote for independence or not.


Standard Life, readers with long memories will recall, has previous form in these matters. As long ago as 1992 it warned that devolution – never mind independence – might cause it to relocate south of the border. Well, devolution happened and Standard Life remained in Edinburgh. So nationalists will argue – and hope – that today’s warning is a comparably empty threat.

And perhaps it would be. Like so many other aspects of the independence argument this is an imponderable matter. A known unknown, if you will. Much would presumably depend on how independence was arranged.

Nevertheless, Standard Life’s warning cannot be easily dismissed. The company will make a calculation of where its interests, not Scotland’s, lie. Moving to England, where it has many more customers than in Scotland, might well be a rational decision. Emotion – or, to put it in terms nationalists might favour, patriotism – may not be worth very much. It’s just business.

Still, this intervention – this threat, if you will – is a test for the nationalists. It makes clear the great gulf between existential and utilitarian nationalists. The former will shrug off Standard Life’s warning; the latter will be worried by it. I have never quite believed there are as many utilitarian nationalists as some SNP figures suggest.

As I write this, Alex Salmond is answering questions in the Scottish parliament. As you would expect Standard Life is dominating the agenda. The First Minister has a slightly hangdog, even despondent, look this afternoon.

Yet he has at least a partial point: Standard Life already operates in many countries around the world (it has a large Canadian operation for instance). It probably could manage fine as a Scottish company after independence too.

But placating or reassuring Scottish business is one of the reasons why an independent Scotland will not be the kind of high-tax state many of its leftist admirers dream of. It cannot afford to be. For the risks of capital and corporate flight are so great – and the flitting is merely a matter of a couple of hundred miles – that business will in many cases be able to write its own legislation and regulation and those bills and regulations will be friendly to corporate Scotland.

Even so, it is hard to avoid the thought that this is another blow to the nationalists. Scaremongering? Perhaps. Cold, hard reality? Perhaps that too.



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  • NBeale

    An insurance company lives and dies by its credit rating. Standard Life plc has a Counterparty Credit Rating of A- (stable) from S&P and a Senior Unsecured MTN Rating of (P)Baa1
    (stable) from Moody’s. Standard Life Assurance Limited has a Financial
    Strength Rating of A+ (stable) from S&P and an
    Insurance Financial Strength Rating of A1 (stable) from Moody’s.

    It’s unlikely that they would have such a good rating if they were dependent on a new and irresponsible Scottish Government without the Bank of England backstopping them, and a new and unproven Supervisor. So they would have to move to rUK – it’s a matter of survival.

  • Slicer

    The Spectator is giving far to much coverage to Scotland.

  • jamie

    There is no valid reason for SLAC to bluff.

  • Tony Quintus

    No currency union means no lender of last resort, no lender of last resort means no major financial institutions domiciled in Scotland.

    • Derick Tulloch

      No, it means that the lender of last resort would be Scotland’s Central Bank, rather than the BoE. And given the scale of Scotland’s banking sector, as S&P, and the Adam Smith Institute, etc. have pointed out, that would discourage the sort of ‘innovative’ investment practices that brought the house down. This is a Good Thing.

      • Tony Quintus

        No, if Scotland uses Sterling without a Currency union it cannot have a central bank, as it cannot increase or decrease money supply, set interest rates etc. Scotland will have a Bank Account.

  • Auldreekie

    Today’s report by Standard and Poor’s report on the economic prospects of an independent Scotland paints rather a different picture to that of all the media hullaballoo about Standard Life.

    In standard and Poor’s analysis:
    ‘Even excluding North Sea output and calculating per capita GDP only by looking at onshore income, Scotland would qualify for our highest economic assessment. Higher GDP per capita, in our view, gives a country a broader potential tax and funding base to draw from, which supports creditworthiness.’

    And it is the top-heavy nature of Scotland’s financial sector which is deemed a bit of a problem:
    ‘The composition of Scotland’s external balance sheet is as yet hypothetical, but our initial observation is that the Scottish financial sector is unusually large, with total assets estimated at 12.5x GDP. We would therefore likely view the financial sector as a significant contingent risk to the state. At the same time, a large part of this activity could be re-domiciled to the UK.’

    In other words, as Wings over Scotland points out: the very thing which the media has excitedly hailed as a threat to an independent Scotland’s economy, is what Standard and Poor’s reckon would be helpful in stabilising it!

    • jazz606

      Is this the same Standard and Poor’s who gave a triple A rating to all those dodgy financial institutions prior to the crash ?

  • Ella

    The lack of informed opinion from many (in both camps) is scary. Journalism is no more honest than it has been in the past, why do unionists believe it now? Westminster are no more honest than they have been in the past, why believe them now?

    Those of us that actually care about Scotland are bothering to get our information from truly independent experts. It involves a lot of work and is highly time consuming, we have to check out every expert that Holyrood, Westminster and the newspapers quote. But it’s worth it, because very few of the people being quoted are remotely independent. The businesses quoted by Westminster are not only full of Tories, but are full of board members that are also board members of organisations like London First! At least most of those quoted by Holyrood are in the kinds of posts where it is in their best interests for Scotland to succeed. Another thing we have to consider is which organisations made threats prior to Devolution but never carried them through.

    Only an idiot is going to take on board the opinion of someone whose actual concern is how it affects London (rUK). But in undoing their lies you learn even more.

    Of course there are pros and cons to Scotland becoming independent, but the cons we have actually experienced as part of the union are not remotely balanced by the alleged pros. Thankfully Scotland is full of great intellectual and creative minds actually willing to work hard to make an independent Scotland succeed. If we stay in the union we just continue to get ripped off for London’s benefit, and we continue to contribute more than we get back.

    We know our country best, we know more about what it needs and we actually care about it. Anyone suggesting that a country is best run by people that don’t know it and despise it really needs to engage their brain. A country will always have a fighting chance with people wanting to make it work, it has no chance when run by people that just do not care.

  • FF42

    the great gulf between existential and utilitarian nationalists. The former will shrug off Standard Life’s warning; the latter will be worried by it. I have never quite believed there are as many utilitarian nationalists as some SNP figures suggest.

    There are no business advantages to independence. None at all. We already have the shared currency, the closely integrated single market and a common regulatory system already. In the most benign scenario, we get to keep most of these benefits if we become independent. In less benign and far more likely scenarios we will end up with some hefty costs, as the Standard Life intervention shows.

    The point is whether independence will ultimately be worth it, despite all these costs You can make a case, although I don’t personally agree with it. You’re either an existential nationalist or you are a fool.

  • allymax bruce

    I attended two different functions in Edinburgh last night; the first was at the National Library of Scotland. Where a lecture on the ravaged Public housing sector of Scotland was given; with adjunct references to ‘independence’, ‘currency union’ & SSHA’s. And this guy is supposed to be an independent, professor, world renowned! I walked out before it was finished; couldn’t take anymore ‘sleight-of-hand’ adjunct references from the eejit ! Apparently, he even forgot his troosers!
    The second function was at the City Chambers, where another professor, on the Yes side, said ‘the Scottish banks that got themselves into ‘trouble’, lost their Scottish identity when they were ‘absorbed’ into the Westminster financial system/bubble’. He said, in an iScotland, we, Scotland’s banking system, would revert to type; frugal, sensible, and objective to ‘world politics’. I think I can see who is scaremongering, and who is not.

  • Malcolm McCandless

    Standard Life has form in threatening to quit Scotland over constitutional reform dating back to 1992. I remember similar threats from big business in 1979 and 1997 over devolution. Also in 2007 and 2011 with the prospect of a SNP government being elected.

    35 years on and Scots are much less likely to be swayed by such threats, indeed we are more likely to heap scorn on business leaders in response.

    • Ella

      Check out who their board members are and what other organisations they are involved with! That tells you everything you need to know about their motive.

  • Auldreekie

    As Alex says, they speculated about leaving in the event of devolution, Although their statement ventured of the possibility of relocation in the event of a worst case scenario for an independent Scotland’s economy, you can’t help feeling that the failure to mention the possibility of prosperity as well was, despite the statement’s denial, politically motivated. Meanwhile, new investment in Scotland by overseas companies, who seem unconcerned, has never been greater.

  • CraigStrachan

    The Bank of Scotland brand, branches and headquarters should be bought out from Lloyd’s, preferably by a consortium presided over by Sir Bruce Pattullo.

    That’d be independence you could believe in.

  • anyfool

    The whole culture of Standard Life is rooted in Scotland, it will not move to London, why throw your reputation built up around the world based on the conception that solid Scottish habits are what drives the company.
    The whole of its middle and top echelon are Scottish and live up there, it would be impossible to transfer that to anywhere else without losing its whole ethos, that would do more damage than independence.
    This like most scares over Independence is total nonsense and will be shown for that soon.

    • Michael Mckeown

      The culture? seriously its been regulated from London forever so its as British as fish & chips.

    • Wessex Man

      you really are well named!

      • anyfool

        What part of my post is wrong, I had expected better of you than this simplistic comment, Telemachus and Hookeslaw have used this unoriginal comment several times, as the various reports in other papers show, it is an overhyped reaction to Standard Life`s actual words.
        If it comes to the push, giving Scotland all it requires to be independent would be worth it just to remove the cancerous base of Scottish Labour MPs for ever.
        Oil and other things should not be a consideration by anyone who has the interests of England at heart, I would even bribe the Welsh to go along with independence as that is the only thing that will let them grow up and make a decent country for themselves.

    • mikewaller

      Is your comment robust to the point made above by Chuckie Stone concerning the highly nuanced nature of Standard Life’s statement or is this just another example of the stay at home Scots love of victimhood? Certainly the stuff about bullying in relation to monetary union has been a classic example. Just why should an independent Scotland expect the UK to shape its monetary and fiscal policies with some regard to distinctly Scottish interests? We would not do it for France, so why for Scotland? Please, stay or go, but for God’s sake grow up.

    • JayPee28bpr

      I agree it won’t move to London. Part of its (and of many other insurers/asset managers in Scotland) sales proposition is that it is not just another London firm. However, I bet development agencies for Newcastle, Leeds and (especially) Manchester have all been on the phone to SL today asking for a meeting to help them develop their contingency planning!
      I also agree we won’t see mass movements of business and people. A more likely scenario in the event of a Yes would be certain specific activities moving. Future development might then be focussed in rUK, but nobody shifts entire company activities in the way some reports are suggesting SL might do.
      I’d be more worried if I worked in RBS HQ out near Edinburgh airport. They are all toast whatever the referendum vote.

  • startledcod

    The nationalism that drove, mainly, Mathewson, but also Goodwin as they grew RBS bring to mind the nationalistic folly that led to the disastrous Darien Project. These two huge exercises in Scottish nationalism have both led to near bankuptcy, is Wee Eck following in their footsteps. When Scotland nearly goes bust (again) England will be able to buy it up on the cheap.

  • Wessex Man

    Oh no, expect to, in the next few hours, receive hundreds and hundreds of irate letters from Cybernat Nutjobs fruitcakes accusing Standard Life of blackmail, you of lying and we the poor old flogging horses the English of trampling all over poor old bullied blooded but unbowed Scotland!

  • ChuckieStane

    There is no bullying from Standard Life as they have not threatened to leave Scotland, despite how this has been spun.

    What they said was:
    “In view of the uncertainty that is likely to remain around this issue, there are steps that we can and will take now based on our own analysis. For example, we have started work to establish additional registered companies to operate outside Scotland, into which we could transfer parts of our operations if it was necessary to do so”

    It is a perfectly calm and reasonable statement, not bullying. The implications could be far reaching but 5,000 job losses and “might leave Scotland” are not mentioned anywhere by Standard Life.

    This story may indeed just be bluster (and not from Standard Life, Alex)

  • FrankieThompson

    Good article, Alex.

    Just one small point, but I think it’s worth making.

    The Royal Bank of Scotland rebranded as RBS many years ago, but broadcast commentators never fail to give it its full title which of course includes the word “Scotland”.

    I’m reminded of a row at the time of the oil pollution crisis in the Gulf of Mexico when Barack Obama insisted on calling BP, “British Petroleum” to howls of protest this side of the pond.

    Just a thought

    • mikewaller

      It may have rebranded but it was never reluctant to draw on the general kudos of “Royal” or the then exceptional reputation of Scotland with regard matters financial. In contrast HSBC was always much keener on the initials because, at least until the global elevation of China, a bank based in Hong-Kong and Shanghai would more than likely frighten erstwhile patrons of the old Midland.

      There is also the issue of clarity. It took me some time to understand that the initials HBOS stood for Halifax and Bank of Scotland. Can’t help thinking that in this you are demonstrating yet another instance of Scottish indulgence in victimhood. I do however I agree with the final point about BP and Obama. All parts of the UK have had tankers spill their filth over our shores (+ exploding oil rigs) yet we have never stooped to the crude xenophobia he took to with such alacrity.

      • FrankieThompson

        I think you’re making my point rather better than I did.

        • mikewaller

          That is a lot easier to claim than to substantiate; and surely the conspiracy theory would only hold water if the UK media had followed, in respect of Lloyds, the NI Unionists’ practice of referring to Sinn fein/IRA, as in Lloyds/HBOS. Instead, they have let the relatively healthy UK rescuing bank reap all the opprobrium brought about by its merger with the Scottish basket case.

    • Ella

      Their poor attempts at making it a Scottish issue were hilarious. Although registered in Scotland (you have to be registered somewhere), it had a minority of Scottish ownership. Most ownership was throughout the rest of the UK, with a fair amount of foreign owners too.

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