Scotland's Salmond eyes wealth management

Wealth management could become more important for Scotland, bolstering the country's key financial sector, First Minister Alex Salmond believes. Skip related content

Despite the problems of the bailed-out banks, where thousands of jobs have been shed, the sector's other two pillars, insurance and investment management, are doing well, he told Reuters in an interview.

Speaking after Royal Bank of Scotland this week secured another 25.5 billion pounds from the government, he said he was certain RBS would pay off the public investment given time and opportunity.

The banking crisis and recession had not undermined his case for independence, the head of the Scottish National Party (SNP) said, because Scotland had come through the recession with lower unemployment and higher economic activity than the whole of the United Kingdom.

"I think we would have, like any other country in western Europe, gone into recession: I think our prospects for rapid recovery would have been better," Salmond said, pointing to the country's diverse economy and lower corporate tax rates.

Salmond said he also saw Scotland becoming a personal finance centre after Tesco and Virgin invested in the region during the past year.

But it was wealth management that offered a "good opening" for Scotland's financial sector, building on its existing strength in corporate, pension fund and investment trust management.

"We have never really specialised until very recently in wealth management in Scotland," he added.

"We have the capacity to do so, and I think we have got substantial opportunities in that field."

He also saw Scotland's financial sector offering a "kind of offshoring, but quality offshoring" service for those who wanted to expand and invest once reorganisation had taken place, as it was a slightly cheaper option than other locations.

Scotland's economy has been powered during the past decade by its banks, but they were badly hit in the credit crisis and ensuing recession.

Employment in the financial services sector fell by about 2 percent in the second half of 2008, Ernst & Young's Scottish Item Club said in its 2009 summer report.

The overall unemployment rate in Scotland could reach at least 8.5 percent, with the economy not picking up until 2011, in line with the club's forecast for the rest of Britain.

Salmond said he had a more positive outlook about economic recovery, citing an upturn in regional selective assistance grant applications, positive retail sales and improved export markets in quality engineering.

The strengthening of the oil price had also helped, with "many of the cuts that were forecast in the oil and gas industry having gone into reverse."

But he expressed concern about RBS' enforced sale of branches and key businesses to appease EU competition concerns.

While welcoming the prospect of new competition in the banking sector, he said the sale of too many assets could hamper its ability to pay-off the public investment.

(Editing by Steve Addison)