Scotland keeps its head(count)

Scottish financial services seems set to keep up its headcount when all about them may be cutting back.

Gordon Arthur, interim of CEO Scottish Financial Enterprise, tells us, "A lot of the strength of the Scottish employment market has been driven by financial services. I do not think there is likely to be an impact from current market conditions."

The reasoning behind such optimism is that financial services jobs in Scotland are long-term, catering for fund management, custody, securities administration and retail banking rather than sub-prime mortgages and their related derivative products.

Arthur also claims that growth in Scottish financial services employment isn't dependent on cost advantages, meaning rising Scottish pay is liable to have only an minimal effect: "It's not cost-based considerations, but the desire to spread operational risk away from the City of London that is driving London-based and other international banks to establish asset servicing and fund administration in Scotland."

He maintains that Scottish banks have a more cautious business approach than others. For example, Scottish banks have low exposure to the US sub-prime market. That means when there is a flight to quality in times of turmoil, Scots institutions are the beneficiaries.

Meanwhile, Scottish asset administrators could benefit from rising trading volumes. The London Stock Exchange, for example, saw trades on its electronic system rise 75% in the first five months of the year, following market turbulence and the introduction of a new electronic trading system.