Lloyds could move if Scots vote for independence

Lloyds Banking Group is considering having its registered office in London rather than Edinburgh should Scots vote for independence, banking industry sources have said.

Lloyds, which owns Bank of Scotland, has finalised contingency planning ahead of the September 18 vote. The chances of secession have increased with support for Scottish independence rising dramatically in August.

Banking industry sources said Lloyds executives are considering having the group’s registered office in London, with Bank of Scotland operating from Edinburgh as a foreign division of the business.

Most of Lloyds’ senior executives are based at the company’s headquarters in London but the bank’s registered office, its official legal address, is in Edinburgh, meaning it would be classed as a Scottish bank in the event of independence.

Lloyds has warned that Scottish independence would impact its cost of funding, taxes and compliance costs.

Scottish-based banks have assets worth 12-and-a-half times the country’s economic output and economists have questioned whether an independent Scotland would be big enough to host Lloyds and rival Royal Bank of Scotland.

If Lloyds were to stay in Scotland after it becomes independent, Westminster-based lawmakers have warned that the Bank of England would no longer be the so-called lender of last resort, to provide a backstop were Lloyds to run into trouble.

Lloyds required a £20.5 billion bailout during the 2008 financial crisis, which left the British government with a 40 per cent stake.

The bank, which is now 25 per cent government-owned, has stressed that it will not make any decisions until after the result is known. It has said that in the event of a vote for independence it will work with relevant authorities to ensure it can serve customers across the United Kingdom.

Reuters