| April 24
April 24 Ratings agency Standard & Poor's said
there were "important considerations and uncertainties" that
factored into the creditworthiness of banks should Scotland vote
to end its 307-year union with England in September.
Britain's three main political parties have been campaigning
fiercely to keep the union intact, arguing that both countries
are better off together, while Scotland's nationalists believe a
split would give them the economic freedom to prosper.
In a report published on Wednesday, S&P said it counted the
existence of a Scottish central bank, the Scottish government's
attitude towards helping struggling banks, changes to financial
regulation and independent Scotland's currency among crucial
factors that could impact its ratings on the country's banks.
It added that its ratings on British banks currently assumed
that the UK government would provide extraordinary support to
systemically important banks under stress.
"The willingness and ability of the Scottish government to
support its banking sector appears challenging," S&P said,
highlighting that the Scottish banking system's assets are
currently a high 1,254 percent of Scotland's GDP.
This compares with 880 percent for Iceland in 2007, just
before its banking system collapsed, the ratings agency said. It
currently classifies Iceland as "support uncertain," factoring
no extraordinary government help into domestic bank ratings.
"We note a possible parallel here with Iceland, where in
2008 the national deposit insurance scheme could not honor
claims when the country's outsized banking system failed."
S&P said if Scotland chose to give up the British pound with
the Bank of England's safety net, it would need credible deposit
insurance arrangements on standby to bail out too-big-to-fail
banks and instill depositor confidence.
The agency added that, if Scotland chose to leave the pound,
creating a separate banking market would mean higher costs for
all banks operating in the country.
New York-based money manager BlackRock said last
month that Scotland would be better off launching its own
currency rather than keeping the British pound or joining the
The report follows a slew of warnings from other financial
services companies, including RBS, Standard Life
and Barclays. The bosses of oil majors BP and
Royal Dutch Shell have also voiced arguments against a
'yes' vote for independence.
(Reporting by Richa Naidu in Bangalore; Editing by Cynthia