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important financial centre in Europe.
Adds Johnston, “We are a bit weary of the
determination of some to apportion blame to
others. We are all to some extent culpable.
We lived in an environment of freely
available loans, seemingly to interpret a loan
as a gift. We forgot that there are two
principles: Firstly, to interrogate whom you
are giving the money and secondly, that
loans have to be repaid.”
ENERGETIC DEAL FLOW
One of the country’s largest employers is the
Scottish oil and gas industry, with more
than four per cent of the local workforce
dependent on production. Scottish
government estimates, which are based on
average oil and gas prices in 2008-09 indicate
that North Sea revenue could be worth as
much as £14 billion.
In the first six months of 2008, the oil and
gas market was fertile ground for dealmaking
as M&A activity in and around Aberdeen
remained stable, with Scottish advisers
uniformly witnessing a flurry of activity in
In a parliamentary debate, First Minister Alex Salmond said the Dunfermline BS was of “vital importance”
the first quarter propelled by changes to the
Capital Gains Tax (CGT) regime. “Taper
symptom of the global financial crisis.” of total Scottish GDP. According to Scottish relief caused this spike in private company
Jeremy Batstone-Carr, head of research Enterprise, the financial and business services disposals, pulling forward deals that would
at Charles Stanley Wealth, tends to agree, sectors combined account for a quarter of have otherwise completed later and
suggesting that there will be little or no Scottish GDP and sustain more than temporarily inflating M&A numbers,”
impact on risk appetite in Scotland. “The 86,000 jobs. says Graeme Cassells, partner at accountancy
Dunfermline had a presence and a high Over the past 12 months, the industry has firm PKF.
degree of loyalty among its customers. been the stage for a number of M&A mega- Later that year, M&A activity in this
From a consumer perspective, its impact deals, including the acquisition of a 58 per sector mirrored global trends as the liquidity
crisis caused deal values to plummet.
Number-cruncher Zephyr reports that M&A
“Most of us are disappointed at what has happened. Like many
price tags for UK oil and gas assets more than
halved last year, falling from 145 disclosed
financial institutions, the Dunfermline got over-enthusiastic
transactions worth £4.7 billion in 2007 to
about its lending and threw away its original knitting” Bryan Johnston
121 deals worth just £2 billion.
Much like the rest of the UK, advisers
north of the border witnessed a spiralling
is significant, however, from the corporate cent stake – subsequently upped to 70 per decline in dealmaking after the CGT
perspective it doesn’t register highly on cent – in Royal Bank of Scotland (RBS). deadline on 5 April 2008. Says Merlyn
the Richter Scale.” The government also moved to acquire a 58 Gregory, manager of diligence services
per cent stake in HBOS prior to its merger at Calash: “The slowdown continued
FINANCIAL AFTERSHOCKS with Lloyds TSB. These mega-deals although throughout 2008, which we had
The financial services industry in Scotland part of a broader recapitalisation of a number anticipated owing to a drop in liquidity
has historically been buoyant, growing at of leading banks have gone some way to available to businesses. For us, it hit
more than twice the rate of its UK damaging the reputation of the Scottish rock bottom in November when
counterpart over the past five years and financial services market, which prior to uncertainty peaked and very few deals
worth around £7 billion, or seven per cent the credit crunch ranked as the fifth most happened at all.”
Mergers & Acquisitions 35
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