What Happens to British Banks If Scotland Votes to Separate? Q&A

Scots are set to vote today in a referendum on whether to leave the United Kingdom, with the first results expected early tomorrow morning.

A “yes” vote would complicate the future of financial institutions with operations on both sides of the border, especially Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, which were both bailed out by the U.K. after the financial crisis and have substantial operations in Edinburgh.

Q: Would the Bank of England impose controls in the event of a “yes” vote to prevent money fleeing Scotland or stem a financial panic?

A: According to David Bell, a professor of economics at Scotland’s University of Stirling, an extreme scenario could see the Bank of England limit the amount customers could withdraw in a day or force banks to close for a day or more.

The central bank may reiterate that it is still the lender of last resort to Scottish banks until any formal separation to calm fears, JPMorgan Chase & Co. said. All parties will want to avoid a repeat of the collapse of Northern Rock Plc in 2007, where a panic was fueled because depositors couldn’t access their money online.

Bank of England Governor Mark Carney told U.K. lawmakers last week that the central bank would not act indefinitely as a lender of last resort for financial companies domiciled in Scotland, regardless of where most of their assets are.

Photographer: Simon Dawson/Bloomberg

An "I love Scotland" sign hangs beneath flags, including from left, the national flag... Read More

Q: What are banks doing to ensure cash machines won’t run dry if some customers rush to withdraw currency?

A: Former BOE deputy governor John Gieve said officials will be talking to lenders to make sure enough banknotes are stocked in cash machines.

Q: Will internet banking be enabled all day today, tomorrow and the week after? Are banks making special preparations to keep their information technology running smoothly?

A: Officials for Lloyds and RBS said their online services will be operating 24 hours a day as usual. A HSBC Holdings Plc spokeswoman declined to comment on the bank’s information-technology operations.