Terry Murden: Edinburgh might be unlikely beneficiary

THE ringfencing plan for Britain’s banks is clearly going to be more far-reaching than those baying for blood may have imagined.

Separating out functions and “getting back to basics” may appease those who want banks to behave, renounce risk and return to being boring. But it is also leading to a disposals programme that will shrink the assets of the banks, strip out operations and result in thousands of job losses. Anyone who wanted the former without expecting the latter was kidding themselves.

The latest reports over the future of RBS’s investment banking division has set more alarm bells ringing. Rightly so, as a lot of people stand to lose their jobs and the impact on the bank of the proposed changes will be profound, across all its operations.

But there is a danger in the restructuring now taking place under orders from the Treasury and Downing Street that alarm turns to hysteria. The bank yesterday broke its normal “no comment” protocol to deny as inaccurate a report claiming as many as 10,000 jobs would be lost in the running down of the investment banking division.

Understandably, those who feel threatened want answers and the trade union Unite has joined the call for clarification. Stephen Hester, the chief executive, was already planning to outline his plans ahead of the annual results statement on 23 February. It looks like that statement will be brought forward, possibly to as early as next week or else risk the current anxiety becoming much worse.

The figure of 10,000 appears to be an estimate based on the well-trailed plans by RBS to cut its investment banking operation by as much as half, so half of 19,000 current employees is an easy calculation to make.

But the halving relates to reducing its assets, not the number of people it employs. Unless RBS is pulling the wool over our eyes, it looks a safer bet to believe the jobs cull will not exceed 5,000. Still a big number, but at least one that seems to be based on fact rather than speculation.

Nor should suggestions yesterday that it was “retreating” from investment banking be confused with pulling out. It is scaling back, but remains committed to a smaller investment banking business.

One likely outcome of all this is that Edinburgh, thus far regarded as a victim in the RBS crisis, could well emerge stronger. As the bank reverts to a retail and business banking operation, the balance of power will tilt from London to Scotland and jobs may emerge at Gogarburn as a result.

Hopes of the future face up to the headwinds

SOMEWHAT appropriately, the gales have been blowing just as the wind appears to have been taken out of the sails of one of Europe’s best-known wind turbine manufacturers.

As we reported yesterday, Vestas, the Danish firm which once had operations in Campbeltown, is struggling under the weight of higher development costs. It was forced to issue a second profits warning in three months and its shares fell sharply, now down to levels last seen in 2003.

Its statement coincided with confirmation that Pelamis, the Scottish wave power company, has put itself up for sale three months after we reported that it was seeking a strategic partner.

These are supposed to be good times for the renewables sector. It is the industry of the future, the preferred choice of governments everywhere in the search for more sustainable sources of energy.

But financing new industries is costly. Telecoms and bioscience companies required shedloads of money to finesse the technology and create a workable commercial model. The sector’s players will need to steady themselves for possible headwinds that will test their resolve.

High street welcomes a glimmer of hope

DON’T the retailers know they’re supposed to be reporting bad figures? So far, we’ve had some distinctly better news from Next, John Lewis and yesterday JJB Sports (supposedly a basket case), Clinton Cards and Waitrose. The figures aren’t sparkling, but they’re better than expected and do provide a glimmer of hope that the high street may be over the worst.