British banks warn they'll head south if Scotland quits UK

British banks warn they'll head south if Scotland quits UK

EDINBURGH - The battle for the hearts and heads of the Scottish people intensified on Thursday as two banks said they would shift their registered head offices to London if Scotland voted to break away from the United Kingdom in a referendum next week.

The warning from Edinburgh-based Lloyds and RBS was another hit against the independence campaign after the latest poll showed a slender lead for those wishing to keep the 307-year long union with England.

And the Scotsman newspaper, in a front-page editorial on Thursday, announced its verdict of the choice: "We are better together."

The latest developments heightened the drama and the passions surrounding the historic referendum.

In the past week, polls had shown a surge in support for the independence campaign led by Alex Salmond's Scottish National Party, and it appeared they were on a march to victory in next Thursday's vote.

That prompted Conservative Prime Minister David Cameron and David Miliband of the Labour Party to head to Scotland on Wednesday to make emotional appeals for Scots to stay within "Britain's family of nations".

The pro-independence camp says it is time for Scots to rule their own country and build a fairer society without being told what to do by a political elite in London. The campaign for staying together says Scotland is more prosperous and secure within the United Kingdom, and says an independent nation would struggle to be economically viable.

The unanswered questions of what currency Scotland would use and what central bank it would have led to alarm in the corporate world as well as weighing on voters' minds.

Thursday's announcements by Edinburgh-based Lloyds (LLOY.L: Quote, Profile, Research) and Royal Bank of Scotland (RBS.L: Quote, Profile, Research) - both part-owned by the British government - was greeted by the "No" campaign as bolstering their position.

Lloyds bank, which is 25 per cent-owned by the British government and controls Bank of Scotland, said its contingency plans included setting up "legal entities in England", a move that would not affect its business.

RBS said it would be necessary to re-domicile its holding company. TSB Banking Group (TSB.L: Quote, Profile, Research), which is part-owned by Lloyds, said it was likely to relocate some operations to England.

Lloyds' headquarters are in London but its registered office is in Edinburgh. RBS senior management is based in London but its registered offices are in Edinburgh. The location of a company's registered office, its legal home, is what dictates its regulatory and tax regime.

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