It is barely a year since Scotland’s twin banking citadels came toppling down, threatening the foundations of the UK’s banking system and Scotland’s entire financial sector.

Between them, the two biggest Scottish banks lost £29 billion last year, putting them both in the top six for the world’s biggest loss-making banks, according to Banker magazine – not to mention the £850bn estimated cost of the ignominious taxpayer bail-out. The magazine said the best performers had “stuck to the basics of banking”.

Sir George Mathewson, Royal Bank of Scotland’s former guiding light and the man who appointed Sir Fred ­Goodwin, has said the bank’s exposures “just shocked and amazed me”. Sir Peter Burt, ex-chief executive of Bank of Scotland, has said his successors “got greedy”.

The fall from grace of the Scottish icons prompted at first shock and disbelief, then anger and accountability, and more recently a mood of self-healing denial, as our economic and political leaders have helped to talk up a recovery.

We are told that there have been fewer job losses than feared, also that the sector has proved unexpectedly resilient.

But is there really a renaissance just around the corner?

Crawford Gillies, chairman of Scottish Enterprise, says: “It’s a blow, you can’t get away from it. But it is not the death of the Scottish banking sector and we have many opportunities in the sector looking forward.”

Owen Kelly, chief executive of Scottish Financial Enterprise (SFE), is the sector’s chief cheerleader. He says: “We have taken a hit but it is important to keep in mind there is more to the industry than just banks.”

He points to the relative health of insurance, life and pensions, and the “asset servicing” operations from the likes of JP Morgan and BNP Paribas.

“From talking to the people actually running those businesses their expectations are very positive … there are sectors in the industry which are continuing to do well and to prosper,” he adds.

“Likewise, Scotland remains one of the premier fund management centres in Europe and the world and people are still doing good business.”

About £460bn, or 14% of total assets under management in the UK, is managed in Scotland.

Alasdair Buchanan at Edinburgh-based Scottish Life says: “There will be very few people around who don’t know someone who works for one or other of the banks … but at the business level there has been no effect whatsoever in the context of businesses like ours, which are outperforming competitor companies from across the UK in our particular markets.

“I don’t think there is any evidence that the Scottish financial community has a wider problem.”

Key players such as Standard Life, Scottish Widows, Aberdeen Asset Management and Baillie Gifford appear to be thriving.

Mr Buchanan recalls: “If you go back a couple of years, the big debate in SFE meetings was, ‘Are we able to generate enough people of the right calibre in order to sustain the financial community?’ Edinburgh was becoming a more and more difficult place to recruit people.”

A report by Edinburgh City Council earlier this year warned of “a significant risk of a medium-term negative impact on jobs and the ability for businesses to acquire capital for growth”. The financial sector in Edinburgh employs some 30,000 people, about one in 10 of the capital’s workforce, and supports a further 53,000 jobs.

But last week Tom Buchanan, convenor of the council’s economic development committee, commented: “Edinburgh has done better than I would have expected”.

The capital had been “very lucky” to attract new investment through the crisis, he said, and while unemployment was now just over 3%, he said “2-3% is virtually full employment”.

Archie Kane, the former Scottish Widows chief who now heads up Lloyds Banking Group in Scotland, has said the experience in Edinburgh “is the same if you were in New York or London or Frankfurt”, while Lord (Robert) Smith, a former RBS banker and ex-director of Bank of Scotland, has also said he sees no difference between Scotland’s woes and those of Germany, France or the United States.

Scottish banking’s eminence grise Sir Angus Grossart – another former RBS director – has talked of Scotland’s “remarkable resilience” in reinventing itself after a crisis, while Standard Life’s retiring chief executive Sir Sandy Crombie, who recently joined the board of RBS, says his experience with Standard is that “sentiment can be made to move on quite quickly”.

But are the wounds really so superficial, or could there be deeper damage?

Financier Peter De Vink, one of the supporters of the lobby group Scottish Banking Renaissance, says: “I feel very strongly we have done immeasurable damage. Financial probity was so important.

“We employ 120,000 people in that industry. I think we will see a lot more people laid off – if you were a £90bn company and today you are £9bn, you can’t afford to employ the same number of people. They have tried to make it a soft landing, 500 here, 1000 there, but they haven’t really done what they need to do.”

Senior business figures told the Scottish Parliament’s banking inquiry at Holyrood last month that they saw danger signals.

Richard Keen, Dean of the Faculty of Advocates, said RBS and Lloyds had “clearly moved operations to London from Edinburgh”, taking valuable professional work south, while Jeremy Peat, former chief economist of RBS and one-time Whitehall and Scottish Office mandarin, said Edinburgh was “likely to have lost a great deal of the benefit of having two major head offices”.

Days later Sir George Mathewson – who now chairs First Minister Alex Salmond’s Council of Economic Advisers – told The Herald: “I do think it will be difficult for RBS in the future, in terms of remaining in Scotland.”

Banker Tim Noble, involved in many of Scotland’s financial start-ups, says: “It is very difficult to restart things in the Scottish financial world after you have lost head offices – I know that personally from the general insurance sector.

“I don’t think it will have any immediate effect on other aspects of the financial community. But I am very nervous about the long-term effect if Standard Life gets taken over and Scottish Widows goes south.

“What will happen to the investment management community – will people still leave [big firms] to start up new investment management businesses, which has been a great strength of Scotland? Or will people then set up in London rather than Edinburgh?”

And what about Scotland’s venerable reputation for financial prudence?

Crawford Gillies insists: “Customers don’t bank with Scottish banks because of a sense of prudence, they bank with them because of what these organisations do. Inward investors don’t come here because of a reputation Scotland has for prudence, they come here because of infrastructure and the skill base.”

And Owen Kelly adds: “It is understandable that the impact on our own institutions is uppermost in our minds, but when one gets views from elsewhere, be it Brussels, Geneva or Shanghai, people are not looking at Scotland from these places in that way.”

But in the ranks of well-travelled fund managers, not all are so sanguine.

One says: “There is significant reputational damage. I think when your two flagship banks are bust, people don’t have the same respect for you abroad.

“We travel a lot. We used to make a lot of mileage about the fact we were mean and parsimonious and were very very careful with money.

“We are still as individuals like that, but we have a banking system that is bust so we can’t lecture anyone on the Continent about the benefits of our banking system.”

He adds: “It is all about spin and trying to make it look as if everything is fine again – that is the whole point of avoiding systemic financial collapse. But at the moment we have still got the most ridiculous structures – zombie-type banks that last forever.”

Gerry Kay, chief executive at the tiny, prudent, and successful Scottish Building Society, says: “It has been a real body blow to Scotland. These are 300-year-old institutions and it is going to take really some time to recover from that. It reflects badly on all of us.

“We tried to establish clear water between ourselves and the banks and then the Dunfermline goes down.”

Dunfermline, Scotland’s biggest building society, is now part of the Swindon-based Nationwide.

Ben Thomson, chairman of Noble Group, says: “My real worry is are we being proactive enough about the future and what are we doing to make sure that in five years’ time we don’t have [a situation where we haven’t] any banks headquartered in Scotland, and the six or seven retail outlets are all subsidiaries of banks outside Scotland.

“One or more of these brands should be headquartered in Scotland. That should be a target for Scotland and then we should set out a strategy for how to achieve it. The danger we have is doing nothing and letting it all happen, in which case we are likely to end up with none of them.”

So as our economy seeks new life, will Scotland’s zombie banks come back to haunt us?