UK financial stocks surge on Scottish referendum

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British financial stocks rose sharply after the market opened on Friday following the Scottish referendum result, although the City of London warned serious questions remained unresolved.

RBS shares rose 3.5% to 366p, Lloyds shares rose 1.7% to 77.2p and Standard Life shares rose 1.7% to 424p.

The vote against was a particular relief for many players in the financial services industry and its investors. Last week, RBS, the majority state-owned bank, and Lloyds has announced plans to move its headquarters to London if Scotland votes for independence. Insurer based in Edinburgh Standard Life had warned that it could move much of its operations to England.

RBS said: “Following the result, business continues as usual for all of our clients across the UK and RBS.”

RBS’s board of directors met on Friday morning to discuss the referendum result. A member of the board said: “We will not consider re-domiciling now”, adding that the bank “will still have to do some plumbing” to deal with the confinement of its UK retail operations under the new regulatory regime established. by Sir John Vickers.

Lloyds and RBS executives expressed relief at the outcome of Friday’s referendum. One said: ‘The costs of transitioning to a separate Scottish state would have been substantial. Another risk removed.

Another said: “We always thought the vote would be a (small) no, but obviously we had to have a contingency plan, with 18 months to execute it. Now the status quo remains.

Standard Life said: “We recognize that further constitutional changes are very likely as a result of the clear referendum result. We will review the implications of any changes for our clients and other stakeholders in our business to ensure their interests are represented and protected. “

National Bank of Australia and his Scottish member Clydesdale Bank said it was “business as usual”.

Martin Gilbert, Managing Director of Aberdeen Asset Management, said: “UK investors will welcome a reduction in uncertainty in recent months.

The government insisted ahead of the referendum that it would not make contingency plans for a “yes” vote. The exception to this was the Bank of England, which was on hold for any sign of panic among savers and depositors at Scottish financial institutions.

On Friday morning, the BoE made no comment following the verdict, even as other parts of the city greeted it with great relief. The central bank was ready to offer emergency liquidity to banks north of the border if there were signs of deposit flight.

Capital movements out of Scotland have been reported in the run-up to the referendum. To the extent that this has happened, it might not reverse immediately, warned Neville Hill, chief European economist at Credit Suisse. “A lesson from Europe is that deposits tend to run away and return home – there is a certain degree of inertia,” he said.

Video: Scottish referendum relief rally

“For Scottish banks it has been stressful and I think you will see them re-domiciling in the medium term anyway,” said Philippe Bodereau, fund manager at Pimco who invests in banks. “The result of the yes vote is high enough and will make it difficult to bury the independence discourse for good and the prudent course for a board of directors should be to re-register.”

The City of London welcomed Scotland’s decision to stay in the UK.

Mark Boleat, Chairman of the Policy and Resources Committee of the City of London Corporation, said: “This is a vote for certainty and stability, allowing businesses to plan effectively and individuals to be sure. of their financial decisions. It’s also a vote for the UK’s future – stronger together, working for economic growth, EU reform and a financial center ripe for innovation and open for business. “

But while the ‘no’ vote removes the burden of uncertainty around key concerns such as currency and regulation, as the discussion on devolution progresses, the focus will shift to areas such as taxation.

Peter Wallace, head of financial services at EY in Scotland, said the impact of any further legislative changes, especially one relating to taxation, would be on the agenda. “Change is coming to Scotland regardless of today’s outcome in the form of the Scotland Act and the schedule of additional powers offered by the Better Together campaign.”

Christopher Price, Head of Financial Services UK and Ireland at EY, said: “There is no doubt that the referendum has unsettled investors. While the ‘no’ vote should thwart any panic reaction, investors and business leaders are now looking for long-term political certainty. According to the following today’s result, there may still be implications for financial services in Scotland. “

Howard Shore, executive chairman of Shore Capital, a brokerage firm, said, “If we end up with devo max, there will be [be] a much more regional form of government in the UK. The West Lothian solution is on the table that Scottish MPs will not be able to vote on a whole host of things affecting England. This is a good thing.”

Reporters: Harriet Agnew, Martin Arnold, Sam Fleming, Sarah Gordon


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