Scottish Financial Overview

Scotland has a distinguished history in financial services that dates back over 300 years.  It is now one of Europe’s leading financial centres and the second largest financial hub in the UK next to London.

Contribution to the economy By any measure, the financial services industry is of major importance to the Scottish economy.  The industry accounts for £6bn (over 6%) 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.  Financial services continues to be the fastest growing industry sector in Scotland.  In the last five years (2000 to 2005) financial services in Scotland grew by 36% while the overall Scottish economy grew by 9% and the whole of the UK financial services industry grew by 15% in the same period.

The financial services industry accounts for one in 10 Scottish jobs, with over 113,000 people directly employed in the industry and over 100,000 more employed in support services. In the six years to 2004, direct employment in financial services in Scotland rose by 31.5% compared with 7.5% for the economy as a whole.

Banking

Scotland ranks second to London in the European league table of headquarters locations of the 30 largest banks in Europe, measured by market value.  Scotland is the headquarters location of four clearing banks, including the Royal Bank of Scotland Group (the world’s fifth largest bank) and HBOS.  Many other international banks also have operating bases in Scotland, and the sector continues to expand, with Scottish Widows starting its bank in 1995, and Standard Life Bank opening its doors for the first time in 1998. 

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 over £530billion 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 over £719 billion of funds around the world.

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. The services the asset servicing companies provide from Scotland include 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. Scottish Financial Enterprise members within the asset servicing sector employs some 3,800 people and have over £484 billion of funds under administration within Scotland.

A strong future ahead

In addition to the success and phenomenal growth of Scotland’s indigenous financial services companies, much of the huge expansion of financial services activity in Scotland over the last few years has been the result of substantial new investment into Scotland.  One of the key drivers of this is the outstanding 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, top 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.

This proposition is becoming stronger still. In March 2005, the Scottish Executive published the Strategy for the Financial Services Industry in Scotland – a shared initiative developed and being delivered through a unique partnership between the public sector and the industry.  The vision is for an “innovative, competitive and thriving international financial services industry in Scotland, underpinned by world-class infrastructure and universally recognised as a leader on the global stage”.  The strategy focuses on further strengthening Scotland’s world-class workforce and business environment, further increasing Scotland’s profile as a financial centre, and further enhancing the industry’s competitiveness by supporting product and service innovation.

In May 2006 the Financial Services Advisory Board (FiSAB), the board established to ensure the delivery of the strategy, launched the Annual Report of the Strategy for the Financial Services Industry in Scotland, to outline the work undertaken so far and the achievements made.