Lloyds warns of indy risk as new EU threat to bank HQs emerges

Under the heading Risk Management, the report states: "The impact of a Yes vote in favour of Scottish independence is uncertain. The outcome could have a material impact on compliance costs, the tax position and cost of funding for the group."

Lloyds will continue to monitor the potential impact on the group's business and impact on customers of a vote in favour of Scottish independence, the report said.

Higher on Lloyds list of risks is the potential interventions by competition authorities, including the new UK Competition and Markets Authority, in the event of "perceived or actual market inefficiencies" as banks return to profit.

The widening remit of the recently established UK Financial Conduct Authority was another key risk, as was the developing legislation to ring-fence banks' retail and investment arms and UK and European requirements on the amount of capital banks should hold.

Technology and culture were further risks, with the internet and mobile technologies changing customer behaviour and a recognition that banks require "a culture change" to restore trust.

A UK Treasury spokesman said: "Lloyds have now joined RBS and Standard Life in reasonably and fairly pointing out the risks and costs that arise from independence.

"This uncertainty is being made worse by the Scottish Government's failure to set out a plan for what currency it would use in the event of independence.

"These interventions from business show that the strength and stability of the United Kingdom is the essential underpinning of Scotland's successful financial services sector over several centuries. It's common sense to stick with something that works."

Scottish Conservative finance spokesman Gavin Brown said: "A clear pattern is now emerging, with increasing numbers of financial service companies having serious concerns about the uncertainty caused by the referendum.

"The financial services industry is a jewel in Scotland's crown and central to creating jobs and growing our economy.

"That's why the SNP has to listen to the industry and begin to give clear answers on currency, regulation, and a range of other issues."

Meanwhile, the Scottish Government is facing demands to set out how it would protect the reputation of the country's key financial services sector if independence resulted in major banks being forced to move their registered homes to London.

Labour made the demand after it was reported European Union (EU) law may require such a change.

A BBC blog said that Council Directive 95/26/EC from 1995 states that banks must have their head offices "in the same member state as its registered office".

As a result, it was said that both the Royal Bank of Scotland and Lloyds, both of which have their registered offices in Edinburgh, could be required to move these south of the border.

The directive was described as being untested in the courts, with no case law existing for it.

Those campaigning for Scotland to stay in the United Kingdom said the report highlighted the "uncertainty" of independence.

But a spokesman for Scottish Finance Secretary John Swinney insisted banking jobs "could remain exactly where they are now".

He stressed the Scottish Government's proposals were for an independent Scotland to have "shared system of regulation" for banks that would be "fully compliant with the EU".

Despite that, Scottish Labour finance spokesman Iain Gray demanded Holyrood ministers provide clarity over the future of Scotland's financial services sector if there is a Yes vote in the September referendum.

Mr Gray said: "If major financial institutions were forced to move their headquarters out of an independent Scotland, that would be a massive blow for our economy and would result in the loss of thousands of jobs.

"To simply dismiss these warnings is to treat the fears of Scottish workers in these companies with contempt.

"The uncertainty cannot continue, we need clarity on what the SNP will do to secure Scotland's future prosperity and how they plan to protect our reputation as a centre of excellence for financial services."

Former chancellor Alistair Darling, leader of the pro-UK Better Together campaign, said: "We have seen even more uncertainty emerge regarding what would happen if we vote to leave the UK.

"There is a threat that EU law would require some of our biggest institutions to leave the country in order to be where their main customer base is. With every passing day more risks are coming to the surface.

"These are all risks that we do not need to face. If we want to avoid them, if we want to protect Scottish jobs, then we have to vote to stay in the UK."

Tory Gavin Brown said: "While the European directive is unclear, were it to be the case that head offices did need to move south of the border, this would present a risk to a considerable number of jobs in Scotland."

But Mr Swinney's spokesman said: "These suggestions completely fail to take account of Scottish Government proposals for a shared system of regulation that would reflect the fact banks operate in both Scotland and the rest of the UK and is fully compliant with the EU.

"In any event, this would have no impact on jobs, which could remain exactly where they are now.

"However, the fact that the majority of customers of both banks are located in the rest of the UK and that they have significant offices in both London and Edinburgh exposes the contradictions at the heart of the No campaign's scaremongering tactics.

"In short, this demolishes the Treasury's key argument which UK ministers have been using to justify their bluff on a Sterling area.

"The misleading claims from the Treasury that Scotland has a huge banking sector compared to the size of our economy has been shown to be wrong, and can only be achieved by the London-based markets division of RBS from 2012 and adding the domestic assets of Halifax Bank, run by a Lloyds headquartered in London.

"In reality, the size of the Scottish financial sector is no bigger and therefore no riskier as a percentage of the economy than it is of the UK."