HBOS unveils plans for global HQ

BANK gazumps developers as it enters talks with Scottish & Newcastle to buy former brewery for more than £100 million

THE banking giant HBOS is planning to create a massive new global headquarters' complex in Edinburgh city centre, The Scotsman has learned.

The company is in advanced talks to buy a historic former brewery site in Fountainbridge for a state-of-the-art base for around 6,000 staff.

HBOS confirmed last night that it had entered exclusive talks with Scottish & Newcastle to snap up the site of the former Fountain Brewery, which closed in June 2005. The bank hopes to have the development up and running within five years.

But the move, which would transform the brewery sites on the banks of the Union Canal, has gazumped two development companies that have spent years negotiating with the brewer over the prime sites.

The intervention of HBOS, which is understood to have offered more than £100 million to buy the 12 acres of land from S&N, will also put pressure on the City of Edinburgh Council to redraw an approved blueprint for the area, which designates the brewery land for mixed-use developments, including new homes, shops, offices and possibly a new high school.

HBOS sources said the proposed scheme would be the equivalent of Royal Bank of Scotland's global headquarters at Gogarburn, which required the council to grant special dispensation to the company to allow the £350 million development to go ahead.

Health chiefs had been in lengthy talks with Queen Margaret University College over the sell-off of that 90-acre site, but were left furious when it emerged that an exclusivity agreement had been struck with RBS.

HBOS, which already has a number of flagship buildings in the Fountainbridge area of the capital as well as other large buildings in areas such as Tollcross, Sighthill, Haymarket, Orchard Brae and at the Gyle, wants to create a single "hub" for its full range of businesses.

All that would remain elsewhere in the city would be its 19th century headquarters on The Mound, which has recently undergone a multi-million pound refurbishment.

The Fountain Brewery closed down almost three years ago with the loss of 170 jobs, spelling the demise of 150 years of brewing history on the site.

A spokesman for HBOS said: "I can confirm we have entered into an exclusivity agreement with Scottish & Newcastle to potentially acquire land at Fountainbridge South.

"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.

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

"In addition to improved efficiency and effectiveness, they would benefit from being based at a central location."

Planning and legal hurdles to overcome
CLINCHING a deal with Scottish & Newcastle to buy the Fountain Brewery site would only be the first of several hoops that HBOS would have to jump through.

An exclusivity agreement means no discussions will be held with other parties for a set period. Any deal is likely to be subject to planning permission being secured from the City of Edinburgh Council.

Although property insiders believe the HBOS development could be worth as much as £300 million and would create a major extension of the city's financial district, it is by no means guaranteed to get the go-ahead from the local authority.

Royal Bank of Scotland targeted Gogarburn for its global headquarters after abandoning plans to knock down the former home of the Scottish Office, beside the St James Centre.

A planning brief for the former Gogarburn Hospital site said it should not be used for business purposes and the RBS complex involved developing on large swathes of green belt.

But council officials decided the scheme was justified as it would consolidate Edinburgh's position as a leading financial centre.

However, S&N's agreement with HBOS might trigger legal action. Two development firms S&N has been negotiating with are already building on other former brewery sites in the area and deals had been agreed in principle, but not finalised.

The AMA-Grosvenor consortium is building more than 650 homes and shops and offices at the former S&N keeping and distribution plant, which closed in 2001, in North Fountainbridge.

Buredi, a joint venture between housebuilder the Burrell Company and EDI, the city council's own development company, is creating 170 homes on the site of the Tartan Club, the old brewery social club.

An AMA-Grosvenor spokesman said: "We are in continuing discussions with Scottish & Newcastle".

Speaking on behalf of Buredi, John Mark di Ciacca, EDI's director of development, said: "We have an agreed purchase agreement for a site and were assured it was to be approved imminently by the S&N board."