As I See It
Why it matters where companies are based
RBS chief executive Ross McEwan has issued a fresh warning that the bank may relocate its headquarters south of the border. This may come as a surprise to some – particularly those who believe it has already done so.
The bank will always insist that RBS remains solidly headquartered in Edinburgh. The reality is somewhat different. Board meetings may take place in the Scottish capital, but its top executives are rarely seen in Scotland. Gone are the days when they would be regular attendees at black tie events or hosts on Edinburgh’s golf courses.
RBS and Bank of Scotland, the two leviathans of Scottish banking, have become brands with a Scottish presence. Fred Goodwin may continue to be held in contempt, but at least he fought for Scotland and for Scottish corporate might. He lived in Scotland. He was a member of Scottish clubs. His fellow board members did the same.
Bank of Scotland likewise. It has become little more than the Scottish branch network for Lloyds and its senior staff are the invisible men of the financial services sector. Who could name the current governor, a role that once spoke of Scottish financial power?
Other Scottish companies, particularly the professional services firms, the lawyers and accountants, benefited from the patronage of the banks. That went when decision making at the banks headed south. It was catastrophic in terms of workload and jobs and was a major factor in law firms seeking mergers.
RBS could not blame a parent company for shifting its focus to its Bishopsgate offices in London. Following the crash its major shareholder became the Treasury and it was convenient to be on hand when the Chancellor called. London is where its last two chief executives have lived. This is no small matter. Having the senior directors live among the customers they purport to represent makes a big difference to knowing how they think and what they want.
There is a crucial message here for the nationalists who continue to believe they can build a country around powerful institutions and industries. The Scottish government’s reaction to Mr McEwan’s remark is surprisingly flippant. To infer that relocating RBS would not matter because the jobs of bank workers are not affected is either naive or dishonest.
It matters considerably where a business is headquartered. As indicated above, other businesses benefit from a locally-headquartered company. Decisions are made locally, with local issues in mind. They bring prestige to the area where they are based, and because they are home to the key roles they attract talented staff.
They also pay their taxes where they are domiciled, and that alone should be enough to make this a matter of greater concern to the Scottish government.