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Natwest boss says bank would move HQ to London if Scotland votes for independence

State-backed lender Natwest will move its headquarters from Edinburgh to London if Scotland votes for independence, its boss has said.

The bank was until last year called Royal Bank of Scotland and has been based in the Scottish capital for 294 years.

Chief executive Alison Rose made the remarks just days ahead of Scottish parliamentary elections in which the question of whether to hold another referendum on independence is a key issue.

Royal Bank of Scotland signs are seen at a branch of the bank, in London, Britain December 1, 2017
Image: Until last year the group was known as Royal Bank of Scotland

She was speaking after the bank, which remains 60% taxpayer-owned after being rescued during the financial crisis, reported a sharp rise in first quarter profits and sounded a cautiously optimistic note about the economic recovery.

Ms Rose told reporters: “In the event that there was independence for Scotland, our balance sheet would be too big for an independent Scottish economy.

“And so we would move our registered headquarters, in the event of independence, to London.”

Analysts at US investment bank Morgan Stanley this week rated the chance of a vote for independence at 15% while experts at rival Citi put it as high as 35%.

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Natwest had indicated before the 2014 referendum – which ended in a “no” vote – that it would shift its registered office to London in the event of a “yes”.

But Ms Rose’s latest comments were her first substantive remarks on the issue since taking charge of the group in 2019.

She added: “We are neutral on the issue of Scottish independence. It’s something for the Scottish people to decide.”

Newly installed RBS Chief Executive Officer Alison Rose during a visit to meet with entrepeneur customers at a NatWest business hub in Islington, London. PA Photo
Image: Chief executive Alison Rose said the economy faced continued uncertainty

A change in the group’s HQ address would not have an immediate impact on customers or staff.

On Thursday, the bank said pre-tax operating profits rose by 82% to £946m for the first quarter – partly thanks to a £102m release of funds that had been set aside to cover loans going bad during the coronavirus economic crisis.

Natwest said continued government COVID support schemes were keeping a lid on business borrowers defaulting on their loans.

Ms Rose said there were “reasons for optimism” as the UK’s vaccine programme progresses and restrictions are eased and that its loan book had performed better than expected in the period.

“However, there is continuing uncertainty for our economy and for many of our customers as a result of COVID-19,” she added.

Natwest follows rivals HSBC and Lloyds Banking Group this week in clawing back some of the billions they have set aside for loans going bad as a result of the pandemic.

That partly reflects cautious optimism about the UK’s prospects as well as the fact that the government is still pumping billions into support schemes as the economy emerges from deep freeze.

Natwest’s profit comes after it slumped to a £351m annual loss for 2020, a year in which it put aside £3.2bn to cover for loans going bad because of the crisis.

The release of £102m represents a relatively small part of this provision and mainly reflects the bank’s commercial lending where, it said “support schemes continue to mitigate realised levels of default”.

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COVID-19: How is the UK economy doing?

Meanwhile Natwest benefited from an upturn in mortgage lending as the housing market booms, with new home loans totalling £9.6bn over the quarter, up from £8.4bn in the previous three months.

Retail bank customer deposits climbed by £7.3bn, or 4.2%, to £179.1bn since the end of 2020 as spending slumped and savings increased in lockdown.

As RBS, the bank was bailed out by taxpayers during the financial crisis more than a decade ago.

Last month, chancellor Rishi Sunak offloaded a £1.1bn chunk of the lender but it remains 59.8% owned by the Treasury.

Meanwhile, the group is facing a court case next month after the Financial Conduct Authority (FCA) launched criminal proceedings in March against the bank for alleged failures under money-laundering rules.

In its latest quarterly results, the bank warned it could face “material adverse collateral consequences, in addition to further substantial costs and the recognition of provisions” as a result of the proceedings.

Shares fell by more than 3% in early trading and were 3.4% down at the close.