Lloyds keeps door open for move south despite No vote

Rival RBS has scrapped contingency plans to shift HQ from Scotland to London after vote

Scotland-based Lloyds Banking Group left the door open for a move to London amid uncertainty over the future shape of the United Kingdom despite Scottish voters’ rejection of full independence.

British prime minister David Cameron pledged to devolve more power to Scotland and other regions after the referendum made it clear that Scotland wants a greater say on spending and taxation, which could complicate the tax affairs of companies with offices across the United Kingdom.

Lloyds, one of five lenders that had warned they could move south in the event of a Scottish vote for independence, responded to Friday’s result by issuing a three-sentence statement saying it would keep a “significant presence” in Scotland and that it is focused on supporting lending to home buyers and companies there. A spokesman for the bank declined to comment further.

Rival Royal Bank of Scotland (RBS), meanwhile, made clear that it had scrapped contingency plans to shift its headquarters to London and National Australia Bank, which owns Clydesdale in Scotland, said it remained fully committed to its operations.


Insurer Standard Life also said it had scrapped plans to move, but the company founded in Edinburgh in 1829 warned that further constitutional change is likely after the referendum.

“We will consider the implications of any changes for our customers and other stakeholders in our business to ensure their interests are represented and protected,” the company said.

The value of Scottish financial companies jumped by about £2 billion in relief at the rejection of outright independence.

RBS was the top gainer among leading European banking stocks , rising more than 3 per cent, with Lloyds trading up 1 per cent, TSB 2 percent and Standard Life 1.3 per cent.

The cost of insuring RBS bonds against default fell to their lowest level since May 2008, with the value of its five-year credit default swap tightening by 14 basis points to 65 basis points, Markit data showed.

Investors had withdrawn $1 billion from UK share funds in the week before Scotland's poll, according to a BofA Merrill Lynch Global Research Report.

Investors had feared that customers would withdraw their money from Scotland's banks and life insurers if voters backed independence and cast doubt over whether the country could remain in the European Union and keep sterling as its currency.

In Spain, shares in Barcelona-based Caixabank and fellow Catalonian lender Sabadell were outperforming the index because Scotland’s rejection of independence is seen as dealing a blow to Catalonia’s own secessionist movement.

The rise in Lloyds’ shares and the reduced operational risks could mean the government will resume selling its shares in Lloyds soon, analysts said. The sale of RBS shares, however, is still expected to be several years away.

Britain had to pump £66 billion pounds of taxpayer cash into the pair to rescue them in 2008 and the government still owns 80 per cent of RBS and a quarter of Lloyds.

Lloyds, which also owns Bank of Scotland, could set out its HQ plans in a strategic review due to be announced late next month or early November.

Canada's lenders set a precedent for a shift in the 1970s, when Bank of Montreal and Royal Bank of Canada both moved their headquarters to Toronto from Montreal after a rise in the movement for Quebec separatism raised uncertainty about their future. Quebec did not split from Canada.

Scottish asset managers Aberdeen Asset Management and Kames Capital, a unit of Dutch insurer Aegon, said they do not expect to have to change how they do business in the face of more devolution.

However, businesses and customers might put off major decisions while they await for clarity.