An independent Scotland would struggle to support a viable banking sector in times of trouble, the credit rating agency S&P said on Tuesday dealing a blow to the Yes campaign.

In a report outlining its initial attitude to providing credit ratings to banks headquartered in an independent Scotland, the rating agency suggested they would take a hit because there was no credible public sector backstop.

The report will add to warnings that RBS, Lloyds and other financial companies serving the whole UK will have to move headquarters out of Scotland if there is a yes vote, threatening thousands of well-paid jobs north of the border.

Although S&P stressed it did not take a position in the Scottish independence debate, nor was it issuing formal guidance, it said the choice of currency regime for Scotland was “crucial” for the likely ratings of its banks.

The report stressed the need for a central bank able and willing to offer lender of last resort support, a high quality regulatory regime and sound deposit insurance arrangements.

Giles Edward, the report’s author, said: “The willingness and ability of a future Scottish government to support its banking system is challenging at this point, not least because the Scottish banking system’s assets are currently a high 1,254 per cent of Scottish gross domestic product”.

“This compares with an already high 492 per cent of GDP for the UK., and 880 per cent for Iceland in 2007 just before the banking system collapsed.”

The report added that the Scottish government’s ability to raise debt would also influence the Scottish banking sector and if the rest of the UK refused to enter a currency union, the costs of independence for Scottish banks “would likely be further accentuated”.

S&P has already indicated that as an independent nation Scotland would struggle to match the UK’s top notch credit rating if it failed to negotiate a currency union with London.

All three main UK political parties have ruled out a currency union between the rest of the UK and an independent Scotland, a stance the Scottish National party says is mere bluster which would melt away after a yes vote in September’s referendum.

Fitch, another of the three main credit rating agencies, has warned that the UK’s chances of regaining a AAA rating would be hit by a yes vote because London has promised to honour all of the UK’s debts and then seek a contribution from a newly independent Scottish government.

Moody’s, the other rating agency, has not commented.

S&P’s intervention comes as the No campaign, which has been struggling to maintain its previously healthy lead in the polls, has urged companies to spell out the economic dangers of independence.

Only a small proportion of Scotland’s company owners and leaders have taken a public position on the referendum, but the cross-party Better Together campaign has lagged behind the pro-independence Business for Scotland campaign, which now has more than 1,700 members.

The CBI, the UK’s largest employers’ lobby, has said it opposes independence and announced this month that it had registered with the Electoral Commission as a backer of Better Together’s No campaign, prompting the resignation of a number of Scottish members including leading universities and public bodies.

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