HBOS plans new home for 6,000 staff

HBOS has brushed off sub-prime concerns and announced it's set to open a global office in Edinburgh.

It's been a turbulent week for the Scottish bank, which blamed the global credit squeeze for a 4% fall in its profit margin on the previous year. However, it only wrote down a comparatively measly 227m in fair value adjustments due to the US sub-prime crisis.

Analysts had told us they expected 2008 to be even worse for HBOS, and said it could see some redundancies. However, it is now set to invest 100m in an Edinburgh headquarters, safeguarding the jobs of around 6,000 staff.

The desired location, the former Scottish & Newcastle brewery, would see new state-of-the-art offices bringing together its disparate departments. It would also rival the offices of that other Scottish behemoth - Royal Bank of Scotland - which has a single hub for its staff in the Gogarburn area of Edinburgh.

An HBOS spokesperson said: "We have identified a possible opportunity to potentially consolidate all of our Edinburgh-based businesses in one hub at Fountainbridge. HBOS employs approximately 6,000 people across 16 buildings in Edinburgh. Our operations in the city cover the full range of business activities - including group, corporate banking, retail banking, international, and insurance and investment."

The spokesperson added: "There are clear benefits in bringing together all Edinburgh-based colleagues on to the one city-centre site."

Profits for HBOS last year amounted to 5.47bn, down from 5.7bn in 2006.

As for the outlook for 2008, Leigh Goodwin, an analyst at specialist investment bank Fox-Pitt, Kelton, says: "A lot of its earnings have come from the corporate bank and that has been heavily involved in commercial property loans, and demand for those is going to diminish. And also I don't see the money from its own portfolios of investments being anything like as good as last year."