Scots investment firm setting up English companies

Katherine Garrett-Cox, chief executive of Alliance Trust. Picture: Jane Barlow
Katherine Garrett-Cox, chief executive of Alliance Trust. Picture: Jane Barlow
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Scottish independence: Dundee-based investment manager Alliance Trust has begun preparations for a possible move to England ahead of the Scottish independence referendum, adding to evidence of corporate unease over the looming vote.

Alliance said on Friday it was creating companies in England into which it could transfer activities, in a precautionary move because of uncertainty over the implications of a pro-independence vote on tax, financial regulation, currency and EU membership.

“We are extremely proud of our 126 year Scottish heritage but I think the reality is you have to be very aware of the risks that your customers are facing and ensure you can provide certainty and continuity of services,” Chief Executive Katherine Garrett-Cox said in an interview.

The comments by Alliance Trust, based in Dundee on Scotland’s east coast and which employs around 250 staff, come after similar plans by larger Edinburgh-based peer Standard Life Plc announced last month.

Scots will vote in September in a referendum on whether they want to split from the rest of the United Kingdom, ahead of which a political row has erupted over whether an autonomous Scotland will be able to keep the pound.

Scottish leader Alex Salmond wants to share the currency with the rest of the UK, but the major British parties have rejected this idea.

It is also unclear how easy it would be for Scotland to join the European Union, since European Commission President Jose Manuel Barroso has said states breaking away from existing EU countries would struggle to gain membership.

Garrett-Cox said Alliance Trusts’ clients, 80 per cent based in England, had become increasingly concerned about the impact independence would have on money invested with the firm. The firm has gross assets of more than £3.2 billion ($5.4 billion), according to its website.

“What is very clear from conversations and communications we’ve had with our customers is that this is at the top of their list of risks, and that’s why we felt that we needed to be completely transparent about what’s happening here,” she said.

However Alliance Trust did not say if it envisaged moving all its operations or just its legal domicile in the event of a Yes vote.

Implications of Scottish independence

Among other Scotland-based financial firms, the Royal Bank of Scotland has also warned independence could affect its credit ratings, impacting its costs.

Such comments are important given Scotland is home to the second-largest financial services centre in the United Kingdom after London, accounting for about 150,000 jobs.

Some other companies have also voiced disquiet over the implications of independence. In the energy sector - also crucial for Scotland given the oil and gas reserves in the North Sea - Royal Dutch Shell Plc has urged Scotland to stay in the UK.

Among other major Scottish companies, Aggreko Plc, a provider of temporary power generators, said independence would likely add significantly to its administration costs, though two airlines - British Airways and Ryanair Holdings Plc - have said Scottish independence could be good for them due to proposals to abolish air passenger tax.