eFinancialCareers

Six months ago, Scotland’s financial services industry was adamant it would be sheltered from the credit crunch and redundancies. Now, cracks are beginning to show.

It almost seemed too good to be true – 65,000 new jobs in financial services over the last five years, accounting for 65% of Scotland’s new employment during that period.

With horror stories emerging from Wall Street and the Square Mile, surveys on the Scottish market remained defiantly upbeat.

Finally, in its latest quarterly report, Scottish Financial Enterprise admitted that 19% of financial firms north of the border had chopped headcount and only 35% planned to take more people on this year.

The floodgates of negativity have begun to open. Douglas Adams, an economist at Ernst & Young’s Scottish Item Club, has predicted that 5,000 jobs will be axed from Scottish financial services.

At 5% of the 100,000-strong workforce, this might be a far cry from the carnage anticipated in London markets, but it’s still a hefty chunk.

Then there are Scotland’s banks. Royal Bank of Scotland’s chief executive, Sir Fred Goodwin, was taken to task by furious shareholders over its £12bn rights issue – the UK’s largest.

RBS’s decision to axe 7,000 staff might not be the death knell for its employees north of the border – as the majority of cuts are thought to be coming from the old ABN AMRO team. Still, there’s no doubt a lot of anxiety within the ranks – particularly as the redundancies will be phased in over the next two years.

Now, facing write-downs of up to £3bn on its treasury assets and complex trading securities, HBOS has followed suit. Today it announced a £4bn rights issue to bolster its capital base.

If I worked at HBOS, I’d be considering my options.

With these statistics it’s easy to sit in the pessimists’ camp. Whether widespread job cuts actually appear north of the border is another matter, but at least Scottish employees are getting a taste of the fear gripping the City at the moment.