Scotland politics

Scottish independence: RBS move to England 'a distinct possibility' says Carney

Mark Carney Image copyright AP
Image caption Mark Carney appeared before the Commons Treasury Select Committee

Bank of England governor Mark Carney has told MPs there was "a distinct possibility" RBS would have to relocate if Scotland voted for independence.

His comment was in reference to EU rules requiring a bank's HQ be where it has the bulk of its activities.

Mr Carney would not say if he was for or against a post "Yes" currency union.

The SNP welcomed Mr Carney's "neutrality" but the pro-Union Better Together campaign said the party's position on currency was not credible.

The banking boss was giving evidence to Westminster's Treasury committee.

Conservative MP Andrea Leadsom asked him: "If Scotland votes for independence and joins the EU are you saying that RBS would have to move to the UK, the remaining UK?"

The governor replied: "It's a distinct possibility but I shouldn't prejudge it.

"It depends on their arrangements as well, if they were to adjust more into Scotland the mind and management of the institution."

The BBC's Robert Peston has reported that the relevant European directive, Council Directive 95/26/EC of 29 June 1995, had never been tested in the courts.

Mr Carney also told MPs that any "informal adoption of sterling" by an independent Scotland without a currency union would mean the country losing the lender of last resort facilities of the Bank of England.

Conservative MP David Ruffley asked if the Bank would support RBS and Lloyds if an independent Scotland adopted the pound with no currency union.

Mr Carney told the committee that the bank "can act as lender of last resort to branches and subsidiaries of foreign banks" but it did not have to.

The governor described a currency union as a "political question which the major political parties have ruled out" but added that the Bank of England had "done work on these issues" and "was well appraised of the potential risks".

He said his own speech on the subject in Edinburgh in January, when he talked of countries which are involved in a currency union having to cede some sovereignty, was a "technocratic assessment".

Mr Carney added: "At no time have I said that I do not support or that I advocate a currency union."

Ms Leadsom asked whether Scotland would have to adopt its own currency before joining the euro, as an alternative to continuing to use the pound.

Mr Carney said it was a matter of "European law" and whether the remainder of the UK without Scotland was regarded as a continuing state in the EU, but said he took the views of European Commission President Jose Manuel Barroso as a "starting point".

He continued: "Scotland would have to apply to join the European Union [and] that application, as for any new application to join the European Union, would include a commitment to join the euro in the fullness of time."

Mr Barroso has said that it would be "extremely difficult" for an independent Scotland to join the EU, a claim the Scottish government has described as "pretty preposterous".

Voters in Scotland will decide whether it should be an independent country in a referendum on 18 September.

Best option

A spokesman for the pro-Union Better Together campaign said: "What people in Scotland need is clarity from Alex Salmond about his Plan B for what would replace the pound.

"Would we have to sign up to the euro, as Mark Carney said, or would we set up an unproven separate currency?

"No doubt Alex Salmond's response will be the same as every other time an expert has questioned his plans - Mark Carney is wrong and only the first minister is right. It simply isn't credible."

SNP Treasury spokesman Stewart Hosie, a member of the committee, said: "I am pleased the governor took this opportunity to confirm the Bank of England's neutrality on the issue of Scottish independence, and that his Edinburgh speech was a technical assessment of currency unions, not a judgment on independence.

"Mark Carney was clear that the issue he wanted to get across was the nature of the stability arrangements which are required for the formation of a successful currency union.

"I am pleased that the Scottish government's Fiscal Commission Working Group have described in detail a blueprint for such a successful currency union."

The group, chaired by economist Crawford Beveridge, recently reiterated its view that a formal currency union was the best option for an independent Scotland, saying it had "clear advantages for the rest of the UK".

You can watch the committee session on the BBC's Democracy Live website.