IN a clear message of the harmful effects of a hard Brexit, one of Scotland’s largest businesses, the RBS group, is set to move a large part of its international trading division to Amsterdam.
The bank’s chairman promptly warned of “the much greater disruptive impact of a disorderly Brexit”.
Though the number of Edinburgh-headquartered RBS jobs moving to the Netherlands is just 150 and the setting up the new operation will cost just “tens of millions”, the declaration by RBS is significant because despite Tory Government share sales at huge losses, RBS is still 73 per cent owned by the British taxpayer after the 2008-09 £45 billion rescue by Gordon Brown’s government.
RBS’s Natwest international trading division also helped power the group’s better-than-expected profit figures, as revenue at Natwest Markets, which houses the trading business, increased 17 per cent to £472 million. Overall, profits rose to £939m in the first six months of the year, compared to a £2bn loss in the same period of 2016.
There is a history to RBS’s Amsterdam move. Royal Bank of Scotland merged with NatWest to form the RBS Group in 2008, and later RBS acquired ABN AMRO, the Netherlands’ largest bank, to form briefly the world’s largest bank before the spectacular financial collapse that saw the Government bail out the banks.
Since then RBS has struggled with massive changes, and the Amsterdam news detracted from the welcome announcement that it was back to making substantial profits. Chairman Howard Davies said banks’ dire warnings about Brexit are finally getting through to the Government.
He said: “In recent weeks we have seen a much greater realisation of the much greater disruptive impact of a disorderly Brexit.
“The fact that the Bank of England has asked people to share their contingency plans means politicians are now seeing there are potentially quite serious consequences for London, which could happen in a rapid and unplanned way if we don’t get some transition arrangements.
“We are modestly encouraged people are starting to understand what the stakes are.
“The Government’s more recent rhetoric about the need for a fairly lengthy transition period strikes us as being more realistic. I think we are in a better position now than we were even three months ago.”
Davies added: “People are becoming more hesitant, and that is Brexit-related. People are sitting on their hands a bit, thinking before they put a significant investment in place, they want to see what the UK’s market access is.”
The Bruegel think tank recently said London could lose 10,000 banking jobs and 20,000 roles in financial services as clients move €1.8 trillion of assets out of the UK after Brexit.
Other estimates have ranged from more than 200,000 jobs to as few as 4,000 lost.
RBS, which hinted at a move out of Scotland prior to the 2014 independence referendum, will definitely move 150 jobs in the case of a hard Brexit.
Chief Executive Ross McEwan said the bank plans to build up its Amsterdam unit so its trading division NatWest Markets can continue to operate smoothly after Brexit.
The bank said in its report to the stock market: “NatWest Markets has reviewed ways to minimize disruption to the business and continue to serve its customers well in the event of any loss of EU passporting.
“Should the outcome of the current EU separation negotiations make it necessary, NatWest Markets is ensuring our existing RBS NV banking license in the Netherlands is operationally ready.”
McEwan said: “We have to be in a position to serve our customers.”
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