Terry Murden: Future of Scotland’s banking giant still unclear

In the fevered anti-banking climate of the moment there will be some who will see this as just deserts for the mess the bankers have created. They should pause for breath. We are talking about people’s livelihoods here. Sadly, the calls for revenge and for the banks to scale back their ambitions cannot be achieved without casualties, and it is not those at the top who are suffering.

Scotland will “escape” this latest cull as the investment banking business is centred on London and in the Far East and US. In fact the numbers cut by the bank in Scotland have been more modest than was feared at the height of the crisis. Some 2,000 of the 27,500 jobs cut by RBS have been in its heartland. It still employs 8,500 in Edinburgh though the future is far from certain. Some argue that Scotland could benefit as the bank reverts to a UK-oriented business with less emphasis on operations in London and fewer obligations overseas. Others predict more cuts close to home as the bank unwinds more operations and the unwanted legacy of its rapid expansion.

The restructuring of investment banking is among the bigger shake-ups that chief executive Stephen Hester has undertaken and it will take up to three years.

This may alarm staff and clients who are already unhappy over the uncertainty that has been hanging over them. But with buyers for some of the businesses already in the frame, some of those jobs mentioned above could be saved.

This process represents a significant dismantling of another part of the disastrous merger with ABN Amro and will involve knitting together the remnants of the global banking and markets division with the global transaction services business that was also inherited from the Dutch bank.

What will remain will enable RBS to continue to provide an international service to clients, but on a much reduced scale. Next up is likely to be other international businesses with the insurance division scheduled for a flotation.

Scots legal eagles face having wings clipped

THESE are worrying times for Scotland’s law practices which have weathered previous downturns without too much pain.

This time appears to be different. The slump is deep and long and firms are unable to sustain long periods of weak demand.

It has also been accompanied by a loosening of the ties that advisory firms traditionally held with the country’s big companies as fewer of those running them possess a Scottish postcode. Without good relations on the golf course they need to look further afield for clients, and that is proving a challenge.

Profits are down by 40 per cent across the sector and there have been notable levels of redundancy.

Now, according to a report from PwC, the lawyers believe the current situation will usher in a period of consolidation and a headline-making merger.

It has to be said that there has been much talk in legal circles of such an outcome for some time, though an unwillingness to relinquish control is said to be among the obstacles facing potential merger partners. But with another year of potential profits erosion ahead it may well be that the big merger everyone expects will be with us sooner rather than later.

Taxing questions in US could prompt Osborne

THE more benign news emerging from the US should provide a pointer to economic policy in Britain. While Europe flirts with a return to recession, the US is creating jobs and witnessing the return of homebuyers.

George Osborne, the Chancellor, made a decent attempt at kick-starting the supply side of the UK economy in his autumn statement with a number of measures to help small firms. The forthcoming Budget is an opportunity to go further and adopt the tax-cutting strategy introduced by the Obama administration in Washington.

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