Scotland faces risk of capital flight, warns Deutsche Bank

posh*spice

Deutsche Bank lays out possible scenario comparable to that seen in some eastern European countries following the collapse of the Soviet Union.

An independent Scotland faces the risk of “capital flight” if it cannot strike a deal to keep the pound, Europe’s largest investment bank has warned.

“A new Scottish currency could also trigger capital flight by worried savers ahead of any decisions being made,” wrote George Buckley, Deutsche Bank’s chief UK economist.

http://www.telegraph.co.uk/finance/economics/10826058/Scotland-faces-risk-of-capital-flight-warns-Deutsche.html

http://www.ibtimes.co.uk/scottish-independence-risks-capital-flight-higher-debts-says-deutsche-bank-1448290

zagubov

posh*spice wrote: »

http://www.telegraph.co.uk/finance/economics/10826058/Scotland-faces-risk-of-capital-flight-warns-Deutsche.html

http://www.ibtimes.co.uk/scottish-independence-risks-capital-flight-higher-debts-says-deutsche-bank-1448290

And for a more reasoned response there's this.
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27398298

mystic_trev

zagubov wrote: »

And for a more reasoned response there's this.
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27398298

I really can't see there being many Financial Services left in Scotland, after Independence. The one thing Financial Markets hate is uncertainty. I see that Standard Life have reiterated they might have to move a large amount of their Business out of Scotland if there's a yes vote.

Gerry Grimstone robustly defended the management's disclosure in February that it would take "whatever action is necessary, including transferring parts of our operations from Scotland" in the event of a Yes vote in the independence referendum.

Responding to a shareholder who complained that chief executive David Nish "should stay out of politics, it is not his job" and that the board had "acted disgracefully by making public what it thinks it might or might not do", Mr Grimstone said Mr Nish and the company were strictly politically neutral.

Mr Grimstone added "We would have been strongly criticised if we hadn't made our position clear — we would be failing in our duty if we hadn't looked at contingency plans."

The chairman went on: "We have over 180 Scottish funds and companies — we have got three insurance companies, 13 other companies regulated by the FCA, 75 unit trusts, 65 Oeics, and 38 Scottish limited partnerships.

"Who knows, every one of those if there was constitutional change might be affected, this is a very detailed matter."

But on the headlines that Standard Life would "quit Scotland" after a Yes vote, Mr Grimstone urged shareholders to read the company's actual statements.

Pressed earlier on whether moving operations would mean moving the company's 5000 jobs in Edinburgh from the capital, Mr Grimstone said: "No, it won't mean that...but until we know the technicalities we don't know what the impact will be."

The plans were needed, he said, because "the Californian teachers' pension fund thinking of putting in $500m is of course going to ask how our fund will be regulated were Scotland to become an independent country".

The problem was that "nobody can tell you what the arrangements would be", so to avoid any material impact on the company it had to be able to guarantee continuity of regulation

http://www.heraldscotland.com/business/company-news/head-of-standard-life-warns-of-flight-south.24214221

ruggedtoast

zagubov wrote: »

And for a more reasoned response there's this.
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27398298

Markets dont like uncertainty, and if you drill down into that article what it actually says is that there is no risk to Scotland as long as it remains part of the UK in all but name.

Which coincidentally is exactly what the SNP are trying to achieve as they dont want to actually try and run an independent country.

As a non Scot in the UK, the SNP campaign royally p$$es me off.

You Nats want to give the rest of us the finger, accuse us of intentionally oppressing you, stealing your oil, worrying your sheep, munching your shortbread, covering up our small dogs in non approved tartan dog warming waist coats.

But you expect us to let you use our currency, forgive your part of the national debt, provide you with 100% of the UK oil fields but pay billions for their clean up, have our bank as a lender of last resort, give you open borders, a free trade agreement, the BBC, issue bonds against the rest of our economy, get bailed out if it goes wrong and, presumably eventually, have joint defence (as 4 months from this landslide victory Salmond is planning, you still have not the foggiest idea what you are going to do for an armed forces).

Why on earth do you think we will agree to any of this?@

If you want to be independent then this is what independence looks like. Uncertainty, unemployment, and risk.

You're asking for it, you're getting a taste of it.

princeofpounds

I really can't see there being many Financial Services left in Scotland, after Independence.

Well, it's an english-speaking (for now, until the SNP turn it into Wales Mk 2) country, in a good time zone.

I suspect there will still be room for call centre operations with a devalued Scottish Pound.

Niche financial services could survive if it was a standalone jurisdiction, but acting as a tax haven as part of the EU won't work.

sharnad

zagubov wrote: »

And for a more reasoned response there's this.
http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27398298

As it says with the risks to the uk being high and currency union not happening Scotland can use sterling still but we in uk won't be responsible for it.

zagubov

sharnad wrote: »

As it says with the risks to the uk being high and currency union not happening Scotland can use sterling still but we in uk won't be responsible for it.

Important if true.

It would be in the interests of both countries to regulate their financial sectors rigorously enough to prevent problems, as they have both faced similar problems before. As regards banks moving south, we'd get the risk anyway and I don't want it or need it. I'd like to know what both countries are planning to do to ensure risky financial behaviour and practices don't cause us headaches in the future. As the No campaign would probably regard that as pre-negotiaitng the split and the yes campaign would want to keep their cards close to their chest I can't imagine we'll find out in a hurry.

I'd question whether Scotland gets much benefit from having banks as big as they currently are.

Generali

zagubov wrote: »

Important if true.

It would be in the interests of both countries to regulate their financial sectors rigorously enough to prevent problems, as they have both faced similar problems before. As regards banks moving south, we'd get the risk anyway and I don't want it or need it. I'd like to know what both countries are planning to do to ensure risky financial behaviour and practices don't cause us headaches in the future. As the No campaign would probably regard that as pre-negotiaitng the split and the yes campaign would want to keep their cards close to their chest I can't imagine we'll find out in a hurry.

I'd question whether Scotland gets much benefit from having banks as big as they currently are.

A lot of the very highest paid work is probably in London for RBS at least as that's where the investment banking is for the most part at least. A lot of that benefit will accrue to London and the South East via bankers then buying services.

setmefree2

sharnad wrote: »

As it says with the risks to the uk being high and currency union not happening Scotland can use sterling still but we in uk won't be responsible for it.

zagubov wrote: »

Important if true.

If the politicians keep saying it - eventually you will hear and believe it ....

Scottish independence: Osborne tells MPs currency union has been 'ruled out' "14th May 2014"

Chancellor George Osborne has again insisted that a currency union after Scottish independence would not work and has been "ruled out".Mr Osborne told MPs that this was a "no ifs, no buts" position.

BUT

Scotland's Finance Secretary, John Swinney, said Mr Osborne's stance on sterling was "bluff and bluster" ahead of the independence vote in September.

Commenting on the committee session, Mr Swinney said: "This was a desperate attempt from the chancellor to try and recover some credibility, after his Sermon on the Pound completely backfired and has led to a surge in support for Yes.
"It doesn't matter what George Osborne claims on currency now - the people of Scotland do not believe his bluff and bluster, and even senior UK ministers have admitted that of 'course there will be a currency union'.

Oh dear God.....


http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27405129

setmefree2

The Swinney again

"A currency union is the choice of business in both Scotland and the rest of the UK, and it is clear that the markets will expect the UK to negotiate constructively and in good faith.
"Anything else would simply be damaging to the economy of the rest of the UK."

What a load of tosh..

UK firms reject Alex Salmond's claims over keeping the pound


Alex Salmond's claim that British business leaders want Scotland to keep the pound was categorically rejected by an executive who represents more than 30,000 UK companies on Friday.

Simon Walker, head of the Institute of Directors, said the First Minister's argument that businesses would force George Osborne into entering a currency union was implausible.

Mr Walker said any transaction costs from an indepenent Scotland adopting a new currency would pale in comparison to the financial danger of entering an unstable currency union, adding that other factors would be "100 times more important".
"The transaction costs would be small, minimal… They would be so dwarfed by all the other issues that they really would be a very minor part of the whole business relationship," Mr Walker told The Telegraph.

Ronald MacDonald, the Adam Smith professor of political economy at Glasgow University, dismissed the First Minister's analysis by saying that evidence from the eurozone shows such costs are "actually very small".
He said entering a currency union could bring financial damage to British companies that is five to 10 times bigger than any new transaction costs

http://www.telegraph.co.uk/news/uknews/scotland/10640499/UK-firms-reject-Alex-Salmonds-claims-over-keeping-the-pound.html

mystic_trev

Ronald MacDonald, the Adam Smith professor of political economy at Glasgow University, dismissed the First Minister's analysis by saying that evidence from the eurozone shows such costs are "actually very small".
He said entering a currency union could bring financial damage to British companies that is five to 10 times bigger than any new transaction costs

Did they discuss it over a Happy Meal?