SCOTTISH independence could have a "material impact" on its business, Lloyds Banking Group has warned, as fears were raised that EU law might mean the nation's major banks having to relocate to where most of their customers are - England.

In its annual report, Lloyds, Britain's biggest bank, said, under the heading Risk Management: "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."

The Treasury swiftly seized on the remarks. A 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."

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He added: "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 is common sense to stick with something that works."

However, Scottish Finance Secretary John Swinney said Scotland had a strong and diverse economy. The point about independence, he insisted, "was to win the powers we need to build on those strengths and create a more prosperous and secure economy".

He added: "Lloyds Banking Group's comments show exactly why our proposals for a formal currency area are the right proposals, why they are in the best interests of business on both sides of the Border and why that is what will be implemented by both Governments."

Yet the Scottish Government was also facing calls for clarity after it was suggested that under a 1995 EU directive banks must have their head offices "in the same member state as its registered office"; the implication being a bank's legal home should be in the country where it does most of its business.

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

Alistair Darling, leader of the Better Together campaign, suggested even more uncertainty had now emerged were Scotland to leave the UK.

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

"These are all risks 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."

A spokesman for Mr Swinney was adamant 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".

But this did not appear to satisfy MSP Iain Gray, Scottish Labour's finance spokesman. He said Holyrood ministers must provide clarity over the future of Scotland's financial services sector in the event of a Yes vote because the relocation of major financial institutions would, he insisted, be a "massive blow for our economy and would result in the loss of thousands of jobs".