The bank formerly known as RBS, now called NatWest Bank PLC, has announced that if Scotland votes to leave the UK, it will move to London
Britain’s NatWest would move its headquarters out of Scotland in the event of a vote in favour of independence, its CEO Alison Rose said, only days before parliamentary elections there. State-backed NatWest (NWG.L), which until last year was called Royal Bank of Scotland, has been based for 294 years in the Scottish capital Edinburgh.The reason, something to do with a anti-business culture in an independent Scotland?
“In the event that there was independence for Scotland our balance sheet would be too big for an independent Scottish economy. And so we would move our registered headquarters, in the event of independence, to London,” Rose told reporters.This is presumably not meant to be a threat from the majority (c.59%) State-owned bank or playing politics. For a bit of context, the RBS Group changed its name recently to NatWest Group plc with a view to (I presume) burying the RBS brand and plunging a stake through its heart after its unfortunate recent history. NatWest was an English bank acquired by RBS as it ballooned before bursting I have no doubt that the Chief Executive did not say, and did not mean to say
‘our balance sheet would be too big for an independent Scottish economy if we go bust again.‘.
But the latter is what I am hearing. An implicit admission that the bank risks insolvency, and would expect to be bailed out by the UK government at taxpayers’ expense again. The assumption that the bank is at risk of bankruptcy runs through this announcement like letters in a stick of rock.
So England, Wales and Northern Ireland will be the lucky recipient of all these (theoretical) liabilities.
No true Scotsman should fear independence if it means the departure of this fiscal UXB and its liabilities, a chilly modern-day Darién scheme without the disease and bugs.
But why on Earth should anyone in any country want to receive such a cuckoo in the financial nest? It sounds to me that if the bank were utterly worthless, that would be an improvement. Do we need any more evidence of the perils of fractional reserve banking?
All just regulations I believe. Something to do with where majority of customers live.
Perils of fractional Banking? Is this Graham Bird? He was an Australian blogger who always complained about fractional banking, and he claimed to be a libertarian, except when it came to fractional reserves. His solutions always seemed to increase central control. He is what I call an exceptional libertarian- a libertarian EXCEPT for one subject, which outweighs the libertarian impulse in other ways.
Without a lender of last resort to back it no bank can trade internationally. An internationally credible lender of last resort. This is meant to protect customers shoulld the bank go bust. At present this function is carried out by the BoE.
In the event of independence it is unlikely that the BoE would continue to do so, hence Any Scottish bank must either relocate to some place with a Central Bank to back them or restrict themselves to trading solely in Scotland.
Should the Scots choose to keep the pound, presumably because they don’t trust the Scottish Government to manage a currency responsibly- as certain counties have used the dollar- then there will be no central bank at all, credible or otherwise.
So basically He’s saying that Natwest does far too much business outside of Scotland to give up and far more than a Scottish central bank could guarantee- even if one is set up.
If Sturgeon achieves her ambitions, Scotland’s central bank will be the ECB. Though she’s mighty shy about admitting this, for some reason.
This is incorrect, Nat. West ( National Westminster Bank) was one of the ‘Big Four’ British banks ( Midlands, Barclays, Lloyds, National Westminster ) – Midlands bank made a bid for HSBC, but was swallowed up by it’s intended target. Nat West similarly was consumed by RBS under Fred Goodwin’s expansionary ( at any cost ) strategy.
Anyway, Royal Bank of Scotland has been a bank ( In Scotland ) in it’s own right for 294 years. It just had a fling with Nat West for about twenty years. RBS was always a Scottish bank.
Newsflash: It was the British government that bailed out RBS in ’08 and it cost us not a theoretical but very tangible liability in excess of £100bn to do it.
The Government could probably have made every employee of RBS/NATWEST a millionaire in severance if they’d shut the whole thing down, but instead, Gordon Brown preferred to buy the next election.
At the same time, Gordon the moron Brown completely f*ck*d Lloyds bank too, forcing its shotgun merger with the Bank of Scotland.
At least that’s my recollection.
APL
Not incorrect, in the weird world of corporate names, the UK government companies registry shows that whatever was the holding company is now called ‘NatWest Group PLC’ and it is registered in Scotland so it is the same venerable Scottish bank that was the Royal Bank of Scotland ‘masquerading’ as one of its former acquisitions. So for £100,000,000,000 or so, and who’s counting now (?) we appear to be back where we started. And yes, Lloyds Bank merged with the Bank of Scotland and moved its HQ to Scotland, so that bank may well follow suit and ‘move’ its legal HQ to London in search of more Sterling support.
This is not to say that the physical HQ will move, just that the residence of the company will be in England. So we in England, Wales and Northern Ireland may be bailing out a bank with a lot of operations in a truculent foreign jurisdiction.
Incidentally, the collapse of RBS followed Parkinson’s Law of new premises, they built a brand-new ‘campus’ HQ at Gogarburn outside Edinburgh and abandoned the Georgian splendour of their central Edinburgh HQ just before it all went down the drain.
Pat, indeed the commercial reality is that a bank needs a lender of last resort. However, what that really means is an inflator of last resort. I just fail to see why England should accept the presumption that it should be on the hook for another £100,000,000,000 or so after 13 years of nationalisation have, inevitably, failed to solve the fundamentals and take any more puffs of fake money into our economy.
The government required the largest banks in the UK to split into an investment bank and a commercial bank. This was called ‘ringfencing’ and happened a few years ago. RBS choose to bring back the NatWest brand for the investment bank part.
HSBC, Barclays, Abbey also had to split into two.
Banking has always worked hand-in-hand with the state – the state allowed banks to “suspend cash payments” (i.e. not pay gold and silver – break their contractual obligations) at various times, Scotland was worst for that than England was. In the 18th century courts nearly always found for the bankers, once you had given them your gold you might never see it again, whatever your contract said.
But we have gone beyond all that – we do not have a system with abuses. Our financial and monetary system IS AN ABUSE – not only is there no gold or silver, there are no Real Savings (not really) not even of Fiat Money.
All we have is the sacred Credit Bubble.
Insolvent banks? They are all really insolvent – by ordinary business standards they are all dead.
But they are moving – walking about, walking dead.
That is why they (and the Corporations that depend on them) are called Zombies.
By the way – Adam Smith was no good on banking.
He wanted legislation against small denomination notes (legislation against a non problem) – but had no problem with banks lending out more money than really existed (creating Credit Bubbles).
But then Adam Smith also believed in the Labour Theory of Value – which is totally false. Thought that land owners served no function (thus cutting the legs out from under the Whig landowners – the foundation of liberty). Held that government should build infrastructure (had the man never visited England – the network of private roads and canals?). And held that taxes are balanced out by the benefits of government spending (they are not).
No wonder Gordon Brown liked him.
Of course the great advantage of Scotland over England was the lack of a Poor Law Tax system – that remained true till 1845, but that had nothing to do with Adam Smith.
There was no real poor law tax system in France till the 20th century – but do not tell France 24 that, I was watching that television station today, and they were under the impression that high taxes (to “help the people”) were an ancient French tradition.
Mr Ed. You may be right in form but it seems to me that you are wrong in substance. RBS used to be a largely Scottish bank with some business in the rest of the UK. When it became the owner of NatWest by a reverse takeover its Scottish business became relatively insignificant; in practice it was the old NatWest with some additional but not very important Scottish business. I don’t discount what you say but it does seem pretty unsurprising that, faced with the possibility of Scottish secession and the economic uncertainties that is likely to provoke, the bank should consider itself better off based in England.
David N,
I don’t disagree that it wouldn’t be surprising that the board are hinting at jumping the Tweed, and yes, the bank finds far more business outwith Scotland than in it. RBS also bought into an (eventually) less than worthless Dutch bank ABN AMRO. I agree that the RBS dog wagging the NatWest tail makes little sense, but that is just the background. The issue is that the bank proclaims itself so large with a ‘balance sheet’ (reportedly [notionally] 7 times the size of Scotland’s economy) so large that it feels obliged to move to England. The statement on the reason for moving makes no sense unless it is an admission that the net worth of the balance sheet is negative, and that the bank, huge as it is, is but a liability. I don’t recall hearing of Liechtensteiner, Swiss or Cayman Island banks moving abroad because they are so big. The reason for moving is not ultimately ‘independence’ but ‘insolvency’, and yet they are quite open about it. Bizarre doesn’t begin to describe it.
Is this the Darien Scheme playing out again?
New Caledonia will move to London (again) and Bella Caledonia will go apeshit (again)
On the Division of Labour – previous economists, Scots and French, had discussed the importance of the Division of Labour long before Adam Smith. Even his example of the pin factory was actually from a French encyclopedia article of 1755.
Hat tip to the late Murray Rothbard for this last point.
Hence the “need” for a Great Reset.
There’s also a more prosaic aspect to this:
Having gone tits up once, it only endures with sufficient state backing behind it.
Post Scottish independence, there wouldn’t be sufficient backing, so the trust issue kicks in and no one would do business with them.
Remember the paralysis following the market crash of 2008 was due to the banks not knowing which of their peers were done for.
On independence:
In the past, it was a principle of the pro independence Scottish Nationalist party that they would get a lot of their revenue from the oil reserves in the repatriated Scottish sector of the North sea. Fair enough.
Given that Holyrood is intent of ‘going green’, carbon zero and all that jaz, oil reserves, such as are left in the North Sea would be worthless. Doesn’t that knock a rather large hole below the SNPs independence dingy’s waterline ?
Good point APL – I had forgotten that the SNP had gone for the “Green” stuff. Well that is the end of Scotland – because you can live through a Scottish winter on solar cells, and they are anti nuclear.
Flubber – yes welfare for everyone, from the poor “masses” to the richest bankers. That is the “Great Reset”
This is why the international rich elite support the LEFT in such countries as Brazil, Guatemala and Honduras.
EVERYONE is to have welfare you see – not just rich bankers and Corporate types (who get vast amounts of Corporate Welfare) – EVERYONE.
The money will be created from nothing (Credit Money) and everything will be fine……..
“But this economic and political theory is totally insane” – of course it is, the international elite are insane. Listen to a Klaus Schwab speech – and note that the international elite all think there is nothing odd about these ravings (because it is not just him who is insane – they are all crazy).
Should it threaten to go BANG it should be allowed to go BANG. Tough. It is not to big to fail.
This is another bit of evidence that too big to fail is a synonym for underinsured.