Dundas House on St Andrew Square, central Edinburgh, has been RBS's head office for more than 180 years
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When Royal Bank of Scotland unveiled its £335m purpose-built campus in Gogarburn on the outskirts of Edinburgh almost a decade ago, the Queen attended an opening ceremony that included a fly-past of Tornado jets.

If Scotland votes to secede on Thursday, RBS’s planned shift of its domicile to London is unlikely to be accompanied by such lavish celebrations.

Last week, the five largest banks based in Scotland all said they would relocate their headquarters south of the border if the country votes Yes in Thursday’s independence referendum.

Yet because of its 81 per cent government shareholding and its symbolic importance to Scotland, this shift is most sensitive for RBS, itself a child of the 1707 union between Scotland and England that created Great Britain.

The bank was founded in 1727 by Whig supporters of the British crown using funds transferred from London as part of the union settlement. This money was “compensation” for the losses suffered by many Scots in the Darien scheme, a disastrous attempt to establish a colony in Panama that nearly bankrupted Scotland.

RBS’s rapid international expansion in the early years of this century was a source of pride for many Scots, before turning to embarrassment after its collapse and rescue by taxpayers in 2008.

A person close to the bank’s board said of the possible relocation: “It would be a sad day for the company, for historical and symbolic reasons.”

Speaking by the small river – the Gogarburn – that runs through the vast site, a woman who has worked for RBS for three decades said simply: “Of course it’s a worry.”

Lloyds Banking Group, which acquired Halifax Bank of Scotland during the financial crisis, owns more branches and employs more staff in Scotland than RBS. But the 11,500 staff that RBS has north of the border have been caught up in one of the most contentious debates of the referendum campaign.

The bank seemed to be bounced into making its contingency plan public last week when the Treasury leaked it to the media while an RBS board meeting was still discussing what to say publicly.

The bank had hoped to keep its contingency plan secret until after the vote, even though most analysts had assumed it would have to move south to avoid the higher funding costs that would stem from losing the backing of the Bank of England.

“It was a statement of the bleeding obvious,” is how one RBS board member described its announcement. But the recent advance of the Yes camp in the polls, followed by the announcement by Standard Life and Lloyds of their plans left the bank with little choice but to go public about its intentions, the board member said.

Politicians seized on the announcement. Danny Alexander, UK Treasury chief secretary, said: “If all these great institutions locate to England, you would absolutely see a loss of jobs at headquarters, but over time you would see a pulling away in terms of engagement with Scotland.”

But Alex Salmond, Scotland’s first minister, said the banks’ plan to move their headquarters was little more than a “brass plate” issue, with little consequence for jobs or his country’s corporation tax base.

In a memo to RBS staff, Ross McEwan, the bank’s chief executive, reassured them that any move of its head office would be “a technical procedure . . . not an intention to move operations or jobs”.

RBS’s historic roots in Edinburgh are on clear display. The registered head office is Dundas House, an imposing 18th century building on St Andrew Square, in central Edinburgh.

Analysts at Bernstein forecast that RBS and the other Scottish banks were likely to push ahead with a move south of the border even if there was a No vote. They estimated the cost of relocating at £500m to £1bn each, including the rewriting of every contract.

One of the biggest risks for RBS is that investors and consumers would respond to a Yes vote by selling Scottish assets and shifting their accounts south of the border.

Goldman Sachs said in a research note on Tuesday that “the convertibility risk associated with a Yes vote creates an incentive to sell Scottish-based assets, and households and corporates with an incentive to withdraw deposits from Scottish-based bank accounts”.

If RBS shifts substantial operations to England it would be a major blow to the Scottish financial sector but such is the decline in the bank’s reputation since 2008 that some Scots would be content to see it go. “If RBS moves south a lot of people would welcome that,” said a 52-year-old engineer at a manufacturing plant in Ayrshire on Wednesday.

Copyright The Financial Times Limited 2017. All rights reserved.
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