Thursday, 19 November 2009

HQ blues

Does it matter where a company's head office is located?

That's a question that's often asked here in Scotland. And the answer is, of course, yes. The head office creates work for all kinds of suppliers: from taxi drivers to auditors; from travel agents to lawyers.

So news that some top functions at RBS may be moving to London is certainly bad news for Edinburgh and Scotland:

FORMER Royal Bank of Scotland chairman Sir George Mathewson has voiced doubts about whether the bank will be run from Scotland in future.
Why London? Because London is calling the shots at RBS these days.

When I actually lived in London, this was never mentioned as an issue down there. So many companies are based in London that the odd merger or takeover never threatened London's financial position.

But perhaps things are changing. Here's the key quote regarding BA and Iberia:

The combined company would be incorporated in Spain for tax purposes with the majority of board and shareholder meetings taking place in Madrid. The operating and financial headquarters of the new group would be in London, they said.
This sounds all too familiar to me. Just how long will it be before all managerial control is moved to Madrid?

Now, as a good libertarian, I have no problem with the new airline being based at Barajas instead of Heathrow. There shouldn't "be a law against it". But as we Scots know all to well, a country starts to run into all kinds of problems if takeovers are almost entirely one-way.

The answer to these situations is obvious: create a pro-business environment in one's own country - whether that's seen as Scotland or the UK. There's not much sign of that happening these days is there?

1 comment:

David Farrer said...

Comments made on previous template:

Andrew Duffin
Surely RBS will now be run from London because it blew up and the Westminster administration had to (or rather decided to) pony up the cash to keep the bank in existence? 
He who pays the piper, etc etc, even if he pays with borrowed money. 
Comparisons with the Darien scheme are entirely correct imho.

22 November 2009, 11:19:39 GMT
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john b
This sounds all too familiar to me. Just how long will it be before all managerial control is moved to Madrid? 
Shortly after managerial control of Experian is moved to Dublin and managerial control of Hiscox is moved to Bermuda, I reckon. Approx. the year 5000never.

19 November 2009, 22:53:56 GMT
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Bill (Scotland)
Royal Dutch/Shell worked and works pretty well. Doesn't bother me at all about BA and Iberia. As for RBS, well they got too big (over-geared really, in a very major fashion) and there are consequences that flow from this; I'm sure much of the money-making has been in London-based parts of the business for a long time anyway, also of ocurse undoubtedly the bits that got it into a mess, too, of course. It's capitalism - unfortunately sullied by our socialist government so the market has not been allowed to sort it out. Like it or not with an economy the size of Scotland's and if we weren't part of a bigger political/monetary union in the UK, and two very major financial institutions like RBS and HBOS had more or less collapsed, we'd have been another Iceland. It would have been the Darien Scheme all over again. Provocative I agree, but there it is. I'd rather we concentrated a little more on hard economics and rather less on emotionalism, as exemplified by the ridiculous SNP party political boradcast on just before QT tonight.

19 November 2009, 22:53:26 GMT