SFE chief calls on Scots firms to claim fair share of recovery help

Published on Saturday 21 March 2009 12:57

SCOTLAND must demand its fair share of the UK Government's fiscal stimulus, Scottish Financial Enterprise boss Owen Kelly has urged, as the industry north of the border sets about rebuilding its tarnished reputation.

In an interview to mark the start of his second year in office, Kelly, who is this weekend seeking to build Scotland's name overseas on a trade mission to China with Secretary of State for Scotland Jim Murphy, has set out three priorities for policymakers and business leaders to help the Scottish financial services industry overcome the disastrous events of the past 12 months.

Top of the list is to make sure Scotland is not left behind when it comes to claiming its portion of financial recovery packages – including the Bank of England's scheme announced this week to buy corporate bonds in exchange for a boost to companies' coffers.

Kelly appealed to the Scottish Government and relevant agencies such as Scottish Enterprise to ensure Scottish firms are involved in the programme, designed to improve liquidity and encourage firms to start investing again.

In the same vein, he called on Alex Salmond's Government to support Westminster policies aimed at economic recovery. He said: "It would be good for the devolved Government to very visibly demonstrate that its policies are supporting and working with the UK Government. We are in a time of immensely serious economic trouble and seeing the two governments mutually reinforcing areas of policy direction is really important."

Speaking after the publication of Financial Services Authority chairman Lord Adair Turner's report on banking regulation, Kelly also warned policymakers that any changes to the UK regulatory regime must be performed in unison with other countries. Otherwise, he cautioned, there is a risk that companies start playing countries off against each other amid threats that they will relocate their headquarters to areas where they are promised more favourable regulatory terms.

"There is clearly a need to retrench our approach to regulation, recognising the extent of what has gone wrong. But one of the big risks for the UK is that we get out of kilter with the international context. That allows regulatory arbitrage to happen where people basically move their businesses to take advantage of almost competing regulatory regimes," Kelly said.

Thirdly, Scotland needs to redouble its efforts to promote the strengths of the country's financial community to potential investors abroad, particularly in emerging markets such as China.

Despite the damage done to the reputation of banks such as Royal Bank of Scotland, Kelly said Edinburgh and Glasgow still boast strong financial communities, particularly in the areas of fund management and asset servicing.

He dismissed suggestions that the Scottish financial services industry is now past its prime.

"Our strength on the 'buy side' – the investment side where people make decisions on where money should go – will always give us a real prominence as a decision-making centre in financial services.

"Now is not the time to step back from international promotion. Now is the time to reassert Scotland's place as an international financial services centre."

SFE will tomorrow announce it is strengthening its board through the appointment of two high profile financiers: Ken Barclay, managing director of UK corporate banking at RBS, and Trevor Hatton, managing director for Accenture in Scotland.