PRESERVE OUR REPUTATION
From Chartered BankerApril 24, 2009
In recent weeks there has been increasing speculation on Scotland's reputation as a financial centre. Much of it has focused on our capital city, but the questioned pondered is often whether Scotland as a whole now invokes negative connotations in the financial services world.
I'll get the easy bit out of the way first, and say that my response when asked that question is a definite ‘no'. But I want to explain that answer, and say why I think the constant focus on the question is becoming damaging.
Since January, I have spent a good bit of time in the city and overseas as part of SFE's remit to promote and support Scotland's financial services industry. I have also had many conversations with people working in our companies, hearing directly from them.
In the city, people are of course very aware of the problems at RBS and LBG/HBOS and the level of Government support they have been given. They are closely following the fortunes of these restructured banks. But they are equally aware of the other global companies who have suffered difficulties just as severe. And they are looking at global markets, and the worldwide issues of reforming regulation, decreasing volatility and managing the wider economy.
Overseas, in Geneva, the focus is on UBS and banking secrecy. In Brussels, conversations are focused on Fortis. In China, the problems in the West are seen as emanating primarily from the US. In France, the UK financial services industry is certainly discussed, but at the UK level, not exclusively as a ‘Scottish' problem.
Talking to people working in Scotland in the industry itself, I get a range of views, but there is general recognition that there will be no quick fix. On an individual level, that can mean that we see less movement in jobs, as people are more cautious. Some are looking at issues such as risk management and company reporting - they want to ensure their business is robust as it can be for the future.
People know the industry must change. But the diversity of our industry, its long history, expertise and - yes - its good reputation, are still there.
There's also been some good news. Last month Tesco Personal Finance announced a major expansion in Edinburgh, and a new HQ in the city. Esure announced 500 new jobs for Glasgow. Heriot Watt University is building on its world-class reputation in financial research to create a new centre of excellence, and is this year introducing a new MSc in risk management. It understands the need for increased skills in this area and has the expertise and the ambition to be at the heart of it.
I don't underestimate the problems, the severe impact on many bank shareholders and the damage to the reputation of the banking industry worldwide.
But I am increasingly concerned about an internal focus on the negative in Scotland, and the tendency to take a sweeping view that says mistakes by some people, in one sector of the industry, wipe out all the positives in the rest of it. I am also worried about the turn that some of the anger is taking. People at the head of banks in many global centres made mistakes that cost shareholders dear. But there are no circumstances that justify personal attacks on an individual and his family, in the contravention of the rule of law. The rule remains the foundation of social cohesion, as well as commercial success, and should be defended by all of us, especially our political leaders.
Scotland cannot allow itself to descend into a constant negative. The banking industry has a lot to do and a lot to answer for. But we need to keep a clear head in these troubled times and use our experience to build our collective future as a country and as an economy.
