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Why are wealth firms aggressively targeting Scotland?

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Why are wealth firms aggressively targeting Scotland?

Scotland has become one of the major zones of the wealth battlefield. The country has proved especially attractive to international banks.

Over the last year, there has been a well-documented push from firms such as Julius Baer and Wealth Management into the Scottish capital. But what makes Scotland so appealing? 

‘The vibrancy and the level of activity in Scotland right now is really, really strong. That’s why our Scottish business is growing as strongly as it is,’ said UBS Wealth Management’s head of UK domestic Nick Tucker. The firm has recently taken up a 10-year commitment to a
new office space on the famous St Andrew’s Square, Edinburgh.

UBS attributes this surge in interest to the presence of entrepreneurs in Scotland.

‘Scotland has always had a history of entrepreneurs going back to the invention of the television and the telephone. Real entrepreneurialism is embedded in the Scottish culture,’ explained Debjani Raffan, Scotland regional head, UBS Wealth Management.

Tcam’s joint chief executive Haig Bathgate however, has a different interpretation on why companies are increasingly interested in building hubs in Scotland.

‘This is classic mid-to-late cycle behaviour; we have teams coming out trying to attract business and trying to build more business.’

 

Darwinian evolution

At the moment, Bathgate argues that everybody is still trying to drive growth and expand capacity. Although this does not surprise him, he is not convinced they will all be there in 10 years’ time.

‘It is a classic Darwinian evolution, the strongest guys will survive and the weak guys will eventually trim down and retrench.

‘I remember in the late 1990s Merrill Lynch came up, made a big noise and opened an office in Edinburgh, poaching teams. And then a few years later they were going back with their tail between their legs, licking their wounds.’

Tucker is well aware of this and has found that with regional businesses they need a long-term commitment. ‘Things do not happen overnight, clients like to see a long-term commitment, they want to see you staying.’

He added: ‘We learned that things happen at the pace they happen and you can’t force that pace. It is gradual, incremental growth rather than huge statements.’

Bathgate pointed out that if a business is strong enough – and he highlighted Julius Baer’s balance sheet as an example of this – and it can draw in as much assets as it can, then by the time the downturn hits they will have an established Scottish business.

‘Not everybody will be a winner, I think it is one of those classic things where you need to make hay when the sun is shining.’

Raffan said that while there is a myriad of hire stories coming out of Edinburgh, there is very little new blood coming into the city.

‘The concentration has always been there. The few moving from Julius Baer are just moving from Barclays so it is not new people moving into the city, it is the exact same people.’

Nevertheless, she said that the moves highlight the level of competition in Scotland, adding: ‘There’s nothing wrong with a bit of competition.’

 

Edinburgh versus Glasgow

When building a presence in Scotland, many of the big firms are focusing their efforts on the nation’s capital.

‘Edinburgh is the financial capital of Scotland, it is like London is to England,’ explained Bathgate. ‘If you are going to set up, if you are going to pick one place in Scotland to do it, that’s the obvious place.’

He pointed out that there is a significant sum of assets available in Edinburgh and it makes sense to establish a business there.

However, this is not obvious to all, especially Alec Stewart, who late last year launched his own boutique in Glasgow.

‘I set up in Glasgow because I find it is more central for clients over on the west coast, as well as the north and south of Scotland.’

In general, he finds Glasgow more accessible. ‘It is just as easy to get down to London and the north of England from Glasgow as it is to get up into the highlands. From our point of view there was no disadvantage in coming to Glasgow.’

He noted there is nothing wrong with Edinburgh, but that is already ‘pretty full’ when it comes to wealth firms.

‘I do not see any advantage of being in Edinburgh over Glasgow and frankly, the rents are cheaper which is advantageous,’ added Stewart. 

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