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Scotland the Brand

With the news this week of 3,700 job cuts in Royal Bank of Scotland's (RBS) branches, the government increasing its stake in RBS from 70% to 84% and Lloyds setting off on a £21 billion fundraising spree, it seemed like a good time to launch the Financial Services Club Scotland.

We had our first meeting on Monday at the prestigious Royal Society of Edinburgh …


… with keynote speakers John Rendall, Chief Executive of HSBC Scotland and Professor Michael Mainelli of Gresham College and the London School of Economics.

The focus of the first meeting was to study what the financial crisis has meant to Scottish industry, society, the economy and its future?

Here's a quick overview of a few key facts and backgrounders.

Scotland's population is just over five million people, with 2.7 million workers and an unemployment rate of just over 7%.  GDP was £86.3 billion in 2006, but this is slowing with output in Scotland contracting 6.0% year-on-year since the second quarter of 2008, and Scottish GDP down 3.2%.

In particular, Scotland’s dominant service sector fell by 0.4% quarter-on-quarter during the three months to the end of June 2009, with banking showing contraction of 0.9%.

Banking in Scotland has a long history, beginning with the creation of the Bank of Scotland in Edinburgh in 1695.

Retail banking services to ordinary people followed in the 19th century based upon the trustee savings bank model and Scotland now has four large clearing banks: the Halifax Bank of Scotland (HBOS, now Lloyds Banking Group), the Royal Bank of Scotland (RBS), the Clydesdale Bank (part of National Australia Group) and Lloyds TSB Scotland.

RBS was, until 2008, the second largest bank in Europe and fourth largest in the world by market capitalisation and, in 2005, Scotland ranked second only to London in the European league of headquarters locations for European banks.  However, having expanded greatly with a growth rate of
over 35% over the period 2000 to 2005, the sector is causing big
challenges today as RBS and HBOS keep hitting the headlines and
damaging the brand.

Even so, the financial services industry still employs 5% of the Scottish workforce or 113,160 people, and generates over £5 billion or 7% of Scotland's GDP. Edinburgh is still Europe's fifth largest financial centre and is the fifteenth largest asset managements centre of the world, and Glasgow has a thriving financial market in supporting operations and call centre management for many of the largest firms.

Equally, Scotland has one of the world's largest fund management centres,
with over £300 billion worth of assets directly serviced or managed in the

All in all, the conclusion of the evening’s discussion is that you cannot linger over what is past.

RBS and HBOS happened: GET OVER IT!

Scotland now has to regroup, rebuild and refocus and probably get back to its fundamental roots of asset managmenet and prudence.,

Meanmwhile, one of Scotland’s biggest success stories is the Scotch Whisky industry.

The near totality of Scotch whisky production (90%) is exported, and exports rose 4% to a record $5 billion in 2006, when whisky sales accounted for 25% of Britain’s food and drink exports.


So, if Scotland’s banks can mess up our money, at least we can console ourselves with a stiff shot of whisky.

And that's what we all did at the end of the meeting:


Actually, it was just wine and nibbles, no Whisky, but maybe next time.

Oh yes, our next meeting will take place in January 2010 and will focus upon “Scotland the Future”, with senior figures from new, Scottish based banks such as Virgin and Tesco.

And our third meeting in March will examine “Scotland the Recovery”, and will look at how the Scottish banks have turned around with a focus upon the state of play with HBOS and RBS.

So, if you're reading this and you're in Scotland or you're Scottish, then come along join in.


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About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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