RBS share price: ‘Yes’ vote may lead to pension crisis

Royal Bank of Scotland Group Plc (LON:RBS) could face a giant funding gap in its pension scheme if Scotland votes to become independent this week, The Sunday Times has reported.

In other RBS news, the 80-percent government-owned lender is facing a class action over the treatment of small and medium enterprises by its global restructuring (GRG) division.

RBS’ share price has lost more than one percent in London in early morning trading.

The Sunday Times yesterday reported that RBS could face a funding gap of up to £5.6 billion in its pension scheme in the case of a ‘Yes’ vote on Thursday.

The newspaper quoted Credit Suisse analysts as estimating that many of the UK’s biggest companies, including FTSE 100 peer Lloyds Banking Group (LON:LLOY) and energy major BP (LON:BP) would also be affected, with a black hole of about £100 billion opening up in the UK’s corporate retirement plans.

The funding gap is expected to emerge because pension schemes with members in both Scotland and the rest of the UK could be deemed ‘cross border’ following a ‘Yes’ vote. Under EU rules, such schemes must be ‘fully funded’ at all times.

Earlier this year, BAE Systems’ (LON:BA) chief executive warned of the impact that Scottish independence could have on employee pensions, saying that if Scotland became independent and subsequently joined the EU, the company’s pension schemes might be caught up in EU regulations relating to cross-border pensions.

The Times today reported that the RBS GRG Business Action Group had appointed law firm Clyde & Co to review allegations that viable companies were forced out of business. The group said that about 800 companies had come forward to be considered for the planned action and 200 cases were being reviewed ‘in detail’ with a view to compiling a group litigation case.