Bank of Scotland vows to back oil and gas industry

Gardner: 'Not closed for business'. Picture: Ian Georgeson

Gardner: 'Not closed for business'. Picture: Ian Georgeson

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BANK of Scotland (BoS) has vowed not to turn off the taps to finance for the oil and gas sector, where an estimated 66,000 jobs have been lost since the start of last year amid falling prices and rising costs.

A recent report from trade body Oil & Gas UK warned that further job cuts were likely across the current 375,000 North Sea headcount, but BoS head of commercial banking Alasdair Gardner insisted it would not make “knee-jerk ­decisions” based on volatile oil prices, which have roughly halved in the past year to about $50 a barrel.

Gardner told Scotland on Sunday: “We’ve been through this before, and we genuinely want to be seen as a through-the-cycle supporter of our client base. It’s a challenge in Aberdeen, but we have clients operating internationally who are still looking at expanding.”

Medium-sized oil and gas firms are the most likely to be involved in mergers and acquisitions activity over the next year, according to a recent KPMG survey, and Gardner, who has been BoS managing director for commercial banking for the past six years, said: “There are still transactions happening, and we are definitively not closed for business in this space.”

A purchasing managers’ index (PMI) report from BoS last week showed that growth in Scotland’s private sector economy almost ground to a halt in August, as the strong pound weighed on exports, but Gardner highlighted the manufacturing and food and drink sectors as bright spots despite tough global trading.

He said: “We can’t hide from oil and gas, which has had a significant impact on Scotland, and clearly there are some challenges in the agricultural space, but the PMI remains positive so we shouldn’t talk ourselves down. The biggest challenge is confidence, and uncertainty doesn’t help that.”

The prospect of a second independence referendum and an in-out vote on the UK’s membership of the European Union are contributing to the uncertain mood, but Gardner insisted the bank, which has grown lending to small firms by 3.7 per cent year-on-year, was “politically agnostic” and would not express a view on how the electorate should vote.

“What the Scottish people decide to do is a matter for them and we’ll ensure we work with those decisions to help the country grow,” he said.

Gardner also has responsibility for the lender’s housebuilding proposition, and BoS parent Lloyds Banking Group will launch its first annual report on the sector tomorrow, pointing out challenges and opportunities facing builders.

In July, the group provided £50 million to launch the Housing Growth Partnership, with matched funding from the UK government. The initiative aims to make about 50 investments, ploughing up to £5m in each project, in a bid to provide 2,000 extra homes.

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