Scottish financial services 2008: Good year vs. bad year

Scottish banks have been grabbing the headlines for all the wrong reasons this year, but certain sectors of financial services north of the border have managed to fare relatively well.

2008 WAS A GOOD YEAR FOR....

Wealth management

Scotland's wealth management sector oversees 20.9bn in assets, or 5% of the UK total, according to consultancy firm Scorpio Partnership. It's therefore not surprising that more players have been opening Edinburgh operations to gain a slice of the pie.

The likes of Brown Shipley, Rensburg Sheppards and Williams de Broe have all set up shop in Scotland this year, and Barclays Wealth has been bolstering its team north of the border.

"A lot of wealth managers with strong brands are seeing the region as increasingly attractive and Edinburgh is its major hub," says Catherine Tillotson, head of research at Scorpio.

Oil and gas

Oil prices may have tumbled towards the tail end of this year, but the volume of corporate finance and advisory work coming out of Aberdeen's booming energy sector in 2008 has provided a welcome boost to accountancy firms' balance sheets. They have been building their teams in the granite city as a result.

Aberdeen-based accountancy firm Anderson Anderson & Brown says it has added 27 to its team this year, Hall Morris expects a 40% upswing in corporate finance and advisory work due to oil and gas activity, and PricewaterhouseCoopers is continuing to build its Aberdeen presence.

But with accountants loathe to migrate to where the jobs are, Aberdeen faces a shortage of labour.

Keith Mason, regional director at Hays Senior Finance, Scotland, says: "Oil and gas is the fastest growing market in Scotland, yet we are experiencing a skills-shortage. Aberdeen is the centre of Europe's oil and gas industry, but most senior finance professionals won't consider a move there."

Graduates

While the likes of RBS are curbing their graduate intake, other financial firms in Scotland are looking for university leavers. This is the case even if they made redundancies at higher up the food chain.

Aberdeen Asset Management is cutting jobs, for example, but has maintained its graduate intake. Aegon Asset Management, Baillie Gifford, Martin Currie and Standard Life Investments are also still taking on trainee investment managers, and the Big Four accountancy firms are still big graduate employers.

Faye Chua, head of research at the Financial Services Skills Council (FSSC) says: "In terms of graduate recruitment, we expect the levels to remain the same. With the current economic climate, it seems that there is little impact on the levels of graduate intake among Scottish financial services firms."

AND 2008 WAS A BAD YEAR FOR....

Scottish banks

If, at the beginning of 2008, somebody had suggest that Royal Bank of Scotland would be reduced to a shadow of its former self, HBOS would be forced into a merger with Lloyds TSB and both would go cap in hand to the government for billions of pounds, they would have been laughed out of town.

But we live in unprecedented times, and Scotland's two major banks have been crippled by the financial crisis.

RBS received 20bn from the state, to be 60% government owned and new chief executive Stephen Hester has begun scaling back by announcing 3,000 redundancies in the capital markets division.

After much resistance, HBOS shareholders finally gave the nod to the Lloyds TSB in December, prompting fears of massive job losses - touted (eventually) at around 20,000.

Job-hoppers

Double digit pay rises and counter offers are so 2007: over the past 12 months job hopping in Scotland's fund administration space was much more muted.

"The big change is that candidates are not able to dictate salary and terms. Candidates have to work harder to secure the right move, and employers can choose from more robust shortlists," says Paul Curry, senior consultant at Hudson in Scotland.

Commercial property

Heavy investment into the slumping commercial property market saw Bank of Scotland Corporate post a loss of 800m, compared to a profit of 100m as late as June this year.

But before scary figures of potential redundancies in Scotland's financial sector were being predicted, those working in commercial property lending were tipped as being the first to go.

In July, a labour market report by Inverness-based Mackay Consultants said revised lending conditions by Scotland's banks were putting off property developers.

"Banks would have previously lent at 50% of the property price if the developer could pre-let 50%, but they've now increased that to 90% in some cases. Some property developers therefore don't see the point in going to the banks for a loan, so we'd expect to see some commercial lending redundancies," said Tony Mackay, author of the report.

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