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Credit Suisse Warns Of "Self-Fueling Negative Feedback" In Scotland; Here's Who Is Exposed
While we noted earlier the dramatic outflows and record selling in stocks in UK, Credit Suisse warns, it could get much worse...
The flow diagram below explains how the uncertainty over Scotland's currency and ability to backstop its financial sector can set in train a self-fuelling feedback loop of rising risks and costs to the Scottish financial and sovereign sectors, and a steady migration of capital, activity, jobs and taxes.
And these are the companies most exposed to Scottish economy(via Bloomberg) including sales, manufacturing or employment:
Aerospace, Defense, Industrial:
Amec (majority of 28% of UK rev.: BofAML), Aggreko (Glasgow HQ), Babcock (owns Air Power and sites near Rosyth, Clyde dockyards; 4,750 staff), BAE (Glasgow dockyards, significant interests/staff, govt contracts), Hunting (majoring of 14% UK rev.: BofAML), James Fisher (Defense unit based in Ichinnan), Petrofac (majority of 26% U.K. rev: BofAML), Rolls-Royce (2,400 employees, six facilities), Weir (HQ Glasgow, 13,750 employees), Wood Group (majority of 30% U.K. rev.: BofAML)
Asset Management:
Aberdeen Asset Management (HQ in Aberdeen, 2,062 employees), Jupiter Fund Management, Hargreaves Lansdown
If “yes” vote, single-tier pension from 2016
Banks:
Lloyds (3.7% of total assets, 6.3% of total customer loans), RBS (1.4%, 3.6%), Barclays (0.3%, 0.8%), HSBC (0.1%, 0.4%).
TSB, RBS, Lloyds, NAB Top Banks Exposed to Scottish Independence Risk
Business Services:
Aggreko (HQ in Glasgow, manufacturing & product development facility in Dumbarton), Rentokil Initial, Capita (has contract for provision of IT to Scottish public sector), Teleperformance (call centers, ~4,000 employees)
Chemicals:
Elementis (site in Livingston), BASF (Paisley, Lewis), Dow Chemical (Grangemouth), ExxonMobil (Fife Ethylene) Johnson Matthey (sites in Aberdeen, Edinburgh), Syngenta (Grangemouth)
Drugs
GlaxoSmithKline (manufactures pharma ingredients at Montrose, respiratory medicine at Irvine)
Food & Beverages:
AG Barr (40% of sales), Diageo (29 whiskey distilleries, 4,000 staff, GBP3b in sales), Pernod Ricard (owns Glenlivet, Chivas Regal; 15 Scotch distilleries, 2 bottling sites); Heineken (Edinburgh brewery)
General/Food Retail:
Sainsbury (8,000 staff, 60 stores), Tesco (Scottish workforce is ~4x Sainsbury’s, according to Barclays), Wm Morrison, Next, Kingfisher, Asda
Insurance:
Standard Life (HQ Edinburgh, 8,000 employees)
Oil & Gas:
BG (16% of output in U.K.), Total (5%), BP (3%), Shell (3%), OMV (1%)
Westhouse: EnQuest (all P&D UNKS assets, except Alma/Galia in Scottish part of North Sea), Ithaca all (P&D UKNS assets, except Anglia, Topaz, Wytch Farm field); Parkmead (all UKNS assets, except for 7 blocks in Southern Gas Basin, 2 licenses in Central North Sea); Faroe (Blane, Curlew South assets)
Property/House Builders:
Via FX, businesses moving: Derwent London (Glasgow holdings), British Land, Berkeley, Bovis, Redrow
Weaker GBP would increase attractiveness of U.K. commercial real estate, good news for London house prices: Barclays
Transport:
IAG, Ryanair, EasyJet, Royal Mail (may be renationalized, ~7% employees), FirstGroup (Aberdeen HQ, ScotRail franchise), Stagecoach (Perth HQ, runs Scottish buses), John Menzies (Edinburgh HQ), National Express (~1% of rev.) Air Passenger Duty to fall 50%
Utilities:
Centrica (risk to assets, operations in North Sea; policy risk)
SSE (Perth HQ; Distribution/Transmission assets, policy risk; has 47% of EV in Scotland, Credit Suisse says)
National Grid (policy risk) and Pennon (through Viridor), mid-single digit % exposure for both, UBS says
Iberdrola (owns Scottish Power, has nearly 15% of EV in Scotland, Goldman says)
Scottish economy makeup as of 2011:
Govt, health, education ~22% of GVA; Financial, insurance, real estate ~17%; Distribution, hotels, catering ~13%; Manufacturing ~12%; Professional, support services ~10%; Transport, storage, communication ~8%; Construction ~7%; Mining ~3%
* * *
Longer term, Credit Suisse warns, the "cat is out of the bag".
Companies and governments have been forced to reveal contingency plans and unshakeable premises have been seen as vulnerable to attack (What is a pound? What is the UK?) A decisive (or, in the near term, a narrow) "No" puts these issues back on the back burner behind monetary policy and the like. But any "Yes" (and over time, in our view, a narrow "No") reopens similar questions elsewhere.
And as Citi warned previously,
More broadly, "Referendum Risk" is one of the more powerful manifestations of what we have termed Vox Populi risk, the Crimea being a particularly powerful, if extreme, example. In particular, what happens in Scotland will be particularly closely watched in Spain, which is facing a referendum on Catalan independence. Latent independence movements elsewhere, such as Belgium, could also be influenced by the outcome in Scotland. We regard the revival of local/national concerns, from Scotland to Spain and beyond, as part of continuing anti-establishment sentiment and a backlash against globalisation. And the UK experience (with growing support for UKIP alongside faster economic growth) raises the issue that economic recovery alone may not be enough to reverse the rise in anti-elite, anti-establishment sentiment.
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Default on that Scotish debt and become profitable like Iceland. Arrest the banksters. Don't let them get away.
Macswan
Plad Swan
I tried to sort through the presented data and chart, and I can't find the following:
Regards,
Cooter
City of london better worry, its their own dead teat they will be sucking if the Scots waltz away with the kitty.........
We are talking about Scotland, not IS. Where in this analysis is us tax inversions. By the time the companies threatening to leave Scotland do so, Scotland should have most of the details on money and govt policy ironed out.
Scare piece funded and promoted by London Banksters.
The Fact that Financial litteracy is debated shows Scotland should be free.
Now, that's an interesting thought, a european OPEC...
McSwan.
Scot-Free from Debt
Prime Minister David Cameron has called Alex Salmond's threat to default on Scotland's share of the national debt if it votes to leave the UK "one of the most chilling" claims made throughout the referendum debate.
[perhaps Cameron was "chilled" when reminded of Iceland?]
http://www.telegraph.co.uk/news/uknews/scottish-independence/11073506/Da...
C'mon Scots, you don't have to make sacrifices to the City of London Banks.
Debt free peons will ruin the new world order.
No one needs a gun this time, they just need gumption.
NOTE: if that fails, guns are required.
Regards,
Cooter
"Chilled" does not refer to Dom Perignon, that's for sure.
Maybe a Ukrainian "chill" - even more painful: It's real, not fiat.
Cameron is a moron. Why should anyone carry debt incurred by private sector banks ?
Scotland has already paid it, ten times over.
I heard Cammie give his speech up thar in Sctoland the other day, talking baou tall the "warmth" he has in his heart for the Scots and how "hurt" he'll feel if they decided to part from Engalnd.
The BS made even my dog blush.
Iceland is THE model for taking these criminals in banks and power down and into jail. The media totally covered it up because it was so incredibly effective and turned the country around while wiping out all the scum. VOTE YESSSSSSS!!!
Would love to see YES win, but the level of bullying and scaremongering is beyond beyond.
A YES vote could be the first domino that leads to the fall of the banksters.
What a shit show that would be...
looks lke someone disagrees with your assessment of Iceland
http://www.sovereignman.com/finance/wow-this-story-about-icelands-recove...
anyone that thinks Iceland really prosecuted banksters and their economy is good is a clown. They sent a banker to jail for a few months, so fucking what.
http://www.sovereignman.com/finance/wow-this-story-about-icelands-recove...
They have had capital controls for 6 years, and debt is rising.
Capital controls never work. Once they are releaed, the money leaves at lightning speed. You know this. That's why they have capital controls in the first place.
And Iceland's debt overhang is huge, the populace is going neg am, and everything is even more expensive than Iceland was famous for. And the balance sheets are falling.
All they did was postpone the inevitable.
And to think you thought a podunk country would give the central banks or hedgies the finger and live to tell about it.
For fuck's sake.
And yet, Iceland still has a lower government debt per person the the USA. And that is only federal debt, not including state, county, and municipal.
OK,
Iceland has not achieved perfection for all time and resolved all problems forever,
but it has shown the direction that the first step toward recovery and a better life
needs to be taken.
If the banks are against it it must be good for people.
If it's anti-globalization, its probably going to hurt short term but be better long term.
I sometimes laugh at the whole idea of "globalization". It's clearly not going to be global. China, Russia and India aren't signing up for that any time soon, for example . Why would they (since they're winning)? It's just "western civilization" countries, for the purpose of extracting & concentrating as much wealth as possible while leaning every bankrupt country on the others in hopes they all remain standing. I have tried this several times when out drinking too much with my friends- it doesn't work.
I struggle with this, at least explaining to "common folk". My newest analogy is the following:
It is sad, but this is the world war gambit often playing out. Those who have assets in regions where "turnover" happes lose everything (i.e. the bar owner) and those who owed the bar for fair and consumed production get a hall pass.
Politics tends to drive the winners and losers, so look there for the anti-christ. Works great if you don't mind killing millions of young men who would rather father and lead their family.
Regards,
Cooter
No Debt makes some good points. I listened to the Energy Minister from Russia last night on TV and he said Russia and China were pretty much establishing an alternative to everything in the West -- energy supplies, agriculture, banking, etc. He said Russia's future in in Asia -- China, India, Korea, Japan, etc -- not the West.
Yikes!
I think Barry's sanctions may backfire on him and the EU b/c it forces Russia and China closer and to develop all their own systems. It's a tectonic shift.
I think it is larger than Barry. His checking out on the golf course is an indication that he is realized that the puppet strings were there for a reason.
I think it is the WS Banksters which include the FED. Conflict with Russia/China gives me hope for GOLD since gold is the anti FED, but hope is really worth about what you paid for it, nada...
If Scotland is smart, the day they declare independence they should wipe out all corporate taxes. That would ensure employment and personal income tax, only paid in Scottish currency.
Since the corporations would have to pay their people in local currency, they would have buy it from the government or its banks in exchange for whatever the government decided.
I just don't believe it'll happen. Whether it's legitimate or not.
This comes from a higher place I tell ya. The UK, as we all know, is the center of lies and deceipt, from the Royal's to their Tribe(tm), partners for Centuries.
Somewhere in the Scot soul this is resonating as it is in many other places across the Western world. Christian capitalism has been destroyed by these people and people know it! The know it in their sould which come from their ancestors.
Credit Suisse may know a lot about banking, but they don't know the difference between positive feedback and negative feedback.
(Hint: think of positive and negative in terms of math, not in terms of good or bad.)
credit susi knows a lot about screwing its customers, but that is banking isn't it.
Scotland holds only 9% of the UK debt but keeps 90% of the UK oil production. And this is not all.
Today there is no distinct Pound Scots; but Scotland's three largest national clearing banks (the Royal Bank of Scotland, the Bank of Scotland and the Clydesdale Bank) still print paper pound notes for domestic circulation. They represent the same Pound Sterling value as do Bank of England notes in England and Wales.
Perhaps, investors will move their money assets from GBP to SCO (now 1:1), and then SCO and GBP will be disconnected. Money remains with Scotland and debt remains with UK.
They also regain their Fishing Rights from the EU which Edward Heath traded in 1972
How many little boys did heath get for those????
So Diageo is going to move Scotch distilleries to Birmingham ? Crapita is goinmg to move the Scottish Public Sector clients to Swansea ? Weir Group has most of its operations abroad.
These articles are BS. Nothing much would change in Scotland after all Ireland has more Value-Added in Chemicals than does Germany simply because German profit streams pass through Irish mixer companies.
All this stupid "analysis" to please politicians in London is pathetic, and just how good is Credit Suisse at managing its own business ? Shrinking I-Banking 37%
"
Financial, insurance, real estate ~17%;
Distribution, hotels, catering ~13%;
Manufacturing ~12%;
Professional, support services ~10%;
Transport, storage, communication ~8%;
Construction ~7%;
Mining ~3%
"
Get public sector share down to 18%, and manufacturing up to 16% (20%) -sorted.
credit suisee what a f*cking laugh. they can't keep their balls out of hot water so that makes them an expert on Scotland. FU Brady Duggan
Prediction: Scotland votes yes ( which I support ) It will be a tipping point , bringing the whole world system down
Bring it on!
Unfortunately, the YES vote will have to clear +5% to overcome counting fraud.
This, x1000. You think MI5 and MI6 are watching this from the sidelines? NSA/CIA is also playing the angles. The only independence that will be gained will be taken by force over a lot of corpses. Lock and load.
I also would like to see Scotland vote Yes but it would cause volatility on FX markets for a while (a real bad thing for me right now).
But I have long believed the No vote will win and I see nothing much happening to change my mind. I always knew the banks and Big Money would run scare stories to influence voting. And there is the unexpected component that Salmond is prancing about with a perceived arrogant disposition. Never a good thing in British politics. Neil Kinnock knows why.
of course the banks will chim in, their pay masters the BOE is in danger hence they will make it look like the end of the world when Scotland goes indie.
Borders are a creation of man and not visible to the birds flying above. Any vote by any area stirs the issue of more areas trying to shake free of the bonds they have within countries from which the want more.
Much bloodshed and many wars could be avoided if the issues of regime change or borders could be handled in a more rational and constructive way, but do not expect this to happen. Borders and political control is a problem that haunts man since before the written word.
Recently President Obama and other officials have talked about the legal sanctity of sovereign borders, but in reality this is an argument of convenience masking deeper issues. When it comes down to it we are just pawns in this sad power game. If you doubt this just ask some of the many people displaced from their homes in Syria. More on the subject of sovereign borders in the article below.
http://brucewilds.blogspot.com/2014/03/the-issue-of-sovereign-borders.html
they're scare-mongering the scots from all fronts.
clearly this scottish independence wouldn't seem to be in banksters interest at all... so let's hope those scots show they have bollocks and brain (and are immune to this crazy propaganda going on)
Scotland, with the yes vote, has the perfect opportunity to set up their own Medium of Exchange (MOE) and be the only one in the world to get it right.
Money is "a promise to complete a trade" and makes up any MOE. It is created by traders making trading promises. This is obvious from examination of trade.
Trade is a three step process: 1) Negotiation; 2) Promise to deliver; 3) Delivery.
With simple barter, 2 and 3 happen on the spot simultaneously. Money allows 3 to happen over time and space (and far from conventional wisdom, does not require capital or a capitalist).
Here is the process:
The entire process is governed by the simple relation: INFLATION = DEFAULT - INTEREST.
This requires management. The DEFAULTS must be monitored and recognized. INTEREST collections must immediately be made equaling DEFAULTS thereby guaranteeing zero INFLATION all the time everywhere.
Any MOE (and all MOEs) managed in this fashion will exhibit perfect behavior in trade. All would be candidates for a reserve currency ... though that too is an artifact of improper understanding of how money works ... a result of money manipulation (counterfeiting) by governments, not proper MOE management.
It should be noted that "rollovers of debt" are DEFAULTs. Thus, governments, without a drastic change of behavior, will be treated as "deadbeat" traders. Their unbearable INTEREST charges will remove them from the marketplace. They will be on a strictly "cash" basis.
It should also be noted that things like "velocity", "savings", "hoarding", and "supply and demand for money" play no role whatsoever. Money is always in free supply, all the time and everywhere. The amount of money needed in circulation is always in perfect balance with the money available ... it's the nature of trade ... money in existence just being the measure of outstanding (in process) trading promises.
Also, the manager of the MOE has no interest in "prices", "employment", "GDP", "inflation" or any of the classical non-measurable measures. It's just simple addition and subtraction and application of well known actuarial principles and methods.
INFLATION is "not" measurable. However, with a properly managed MOE its value is known ... it is always zero ... all the time, everywhere.
Todd Marshall
Plantersville, TX
Iceland is doing fine.
Arbitrage.
Enough with the apocalypse threats. It only makes you look stupid and spineless. Or bought and paid for.
There was an enormous rally in Glasgow today in favour of independence...
https://twitter.com/serialsockthief/status/510785226097057792/photo/1
From the mainstream media .. Nothing. Not a chirp. But they did cover a walk in Edinburgh by "The Orange Order" in favour of the Union. For those who don't know. The Orange Order is the closest thing Scotland has to the Klu Klux Klan.
So be somewhat wary of the polls. The reality on the ground is somewhat different than it may appear.
"For those who don't know. The Orange Order is the closest thing Scotland has to the Klu Klux Klan".
Got any facts to back that statement up or are you just showing your own bigoted mindset?
Scotland could, in a souvern way, re-structure any financial agreements in a more favourable way, more plausable way with any of their international partnerns. Creating a system thats fairer to Scotland and comparable to any right to work state, or better, for buisness.
They will be more competitive domesticly and globaly then what this current re-distribution scheme allows them to be, a scehem that they currently endure within now. It cripples Scottish inovation and a country en-masse with one of the highest levels of potential that exists anywhere else in the world. They could re-build and re-discover the earning power of their country's intelectual capital coupled with an empowered government. This could, this would re-pair de-basement done by English outsourcing done for over 50 years creating many victims like John Brown & Company.
War ships that helped win WW2 where built in Scotland, just say thank you and let them go on their way but no f em around for 70 years instead.
Amusing to see all the commentators supporting a Yes vote because they want the Scots to implement some economic policy the commentator advocates.
Most Scots won't be voting for a lot of hard work. Being heavily welfare dependent they'll be voting for more free stuff from some unknown source (no longer the English).
For the record, I support a Yes vote but mainly to set England free of Scot-supported Labor governments, to reduce what English taxpayers have to pay to support the Scots, and to remove the anti-democratic arrangement where currently Scots have some form of self-government with no reduction in their representation at the UK level while the English don't.
but you'll have to pay a lot more tax to support banksters wars & pay back ponzi interests to BoE without the scots in the equation. so at the end you'll regret the 0.5% of government budget spent in social policies for scotland to keep the scots happy so they pay tax to english gvt to finance wars & pay interests to BoE...
funny those guys revolting about a few pounds spent in welfare, but never question the trillions wasted in warfare.