Overview of the Scottish financial industry
Scotland has a distinguished history in financial services that dates back over 300 years. It is one of Europe’s leading financial centres and the second largest financial hub in the UK next to London. Additionally, Edinburgh is ranked as the fourth largest financial centre in Europe, when measured in terms of equity assets. Scotland is particularly recognised for its strengths in bankings; life assurance and pensions, investment management, and asset servicing. It also has vibrant general insurance and corporate finance and broking services sectors, and a strong community of professional advisors and business service companies that work with the industry. The international financial services industry based in Scotland has a long-held reputation for innovation and excellence and provides financial products and services to businesses, private and public organisations, and individuals across the world.
Contribution to the economy
By any measure, the financial services industry is of major importance to the Scottish economy. In 2008 the industry accounted for £7bn (over 7%) of Scotland’s GDP (measured as Gross Value Added). It includes both Scottish companies that are leaders in global markets and international companies that are investing in bases in Scotland. From Q1 2000 to Q1 2007 the financial services industry in Scotland grew by 60%, while the overall Scottish economy grew by 14% and the whole of the UK financial services industry grew by 47% in the same period. As an international financial centre, Scotland is of course affected by changing worldwide business conditions. But the financial services industry still accounts for up to one in 10 Scottish jobs, with some 100,000 people directly employed in the industry and up to 100,000 more employed in support services.
IMA research estimates that around 14% of the total UK assets under management are managed in Scotland.
Banking
Scotland is the headquarters location of the Royal Bank of Scotland Group and the Clydesdale Bank and is a key location for Lloyds Banking Group including Bank of Scotland, Lloyds TSB Scotland and Scottish Widows bank. Standard Life Bank opened its doors for the first time in 1998. Many other international banks also have operating bases in Scotland. Scotland’s banks and building societies undertake a wide range of business activities including retail and corporate banking, treasury, insurance, actuarial and consultancy services, mortgage activities, investment management and corporate finance.
Investment management
Scotland is one of the world's major fund management centres with (in 2008) approximately £580 billion managed directly in Scotland by SFE's member companies. Scotland’s investment managers have expertise in all aspects of asset management and have specialist investment knowledge of markets in the UK and in developed and developing regions throughout the world. They have a strong presence in the institutional, retail and private client markets and particular strengths in areas including pensions and the management of long-term savings, investment trusts, property funds, private equity funds and hedge funds.
General insurance, life assurance and pensions
The diversity of insurance business activity undertaken from Scotland is extensive and the sector in Scotland has expertise in all aspects of general insurance, life assurance and pensions. Pension fund business is particularly active with all pension products serviced including stakeholder, personal and corporate. Other services managed from Scotland include annuities, health insurance and investment products such as unit trusts and open-ended investment companies. Scottish Financial Enterprise's member companies within the general insurance, life assurance and pensions sector manage around £726 billion of funds worldwide.
Asset servicing
In recent years, Scotland has become a major European centre for asset servicing on behalf of fund managers in Scotland, the UK, other parts of Europe and further afield. Our asset servicing companies provide securities servicing, investment accounting, performance measurement, trustee and depositary services and treasury services, in addition to retail fund administration, shareholder services and compliance and client management. In 2008 Scottish Financial Enterprise members within the asset servicing sector employed some 3,800 people and have around £685 billion of funds under administration within Scotland.
A quality environment
In addition to the success and growth of Scotland’s indigenous financial services companies, much of the expansion of financial services activity in Scotland over the last few years was the result of substantial new investment into Scotland. One of the key drivers of this is the quality of environment that Scotland offers for financial services companies and the people that run them. Scotland provides a winning business proposition with its highly skilled workforce, transport connections, wide choice of attractive locations, modern and cost-effective office premises, comfortable housing, quality healthcare and education, and unparalleled leisure opportunities with some of the most beautiful countryside in the world only minutes away from its city centres.
The Scottish Government recognises the importance of the industry, underlining its support through its commitment to the Financial Services Advisory Board, which is chaired by Scotland's First Minister. The Board is a partnership between the public sector and the industry, including Scottish Financial Enterprise, universities and unions. Together the partners have created a financial services strategy focused on strengthening Scotland's workforce and business environment, increasing our profile as a financial centre and enhancing the industry's competitiveness by supporting product and service innovation.
