Could J.P. Morgan really retreat from Glasgow?

J.P. Morgan is not happy with the UK government and isn't shy about letting it know. With reports emerging that the bank is miffed enough to make a hasty retreat from the country, hundreds of jobs at its tech centre in Glasgow could be at risk.

According to the Telegraph, J.P Morgan is both considering pulling back from its new Canary Wharf HQ (a sign that it intends to shrink its investment bank here) and closing its operations in Glasgow and Bournemouth.

If these rumours are true, this would obviously be a devastating blow to Glasgow's financial services sector. The European Technology Centre has been in Scotland since 1999, and now employs more than 900 IT staff.

But there are reasons to believe that the bank may be bluffing.

The assumption is, of course, that tech and back office functions can easily be shipped off to some low-cost Asian destination if prices become prohibitive in Western locations.

But one of the reasons that Glasgow was chosen in the first place was that both real estate and labour are considerably cheaper than other parts of Europe, and the US, and its timezone compatibility makes it a much more practical location than Asia.

Also, the sort of high-end work carried out in Glasgow around the development of front office trading systems is not typically the sort to get offshored to India or Singapore, which tend to focus on support roles.

Then there's the fact that much of J.P Morgan's recruitment in Glasgow has been supported by grants from Scottish Enterprise. The US bank has received 6.3m since 1999, through Regional Selective Assistance grants, and suddenly backing out of Scotland - particularly in the current climate - would not be viewed favourably.

That's not to say the move should be discounted entirely. If J.P Morgan does move its European Technology Centre there's one obvious location closer to home - Eastern Europe.

Barclays Capital, for instance, has just unveiled plans for an 800-strong development centre in the Ukraine, which will employ techies developing everything from trading applications to risk management platforms.

As Rajeena Brar, consultant at IT think-tank Pierre Audoin Consultants told us previously: "There's also a huge pool of innovative IT talent in Eastern Europe that banks are keen to gain access to."

Nonetheless, J.P Morgan has been upping its IT spend this year and Glasgow has so-far benefitted. The bank is still recruiting for both technical and development roles north of the border.