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BAE Systems CEO raises concerns over Scottish independence: report

BAE Systems CEO Ian King addresses the annual Confederation of British Industry (CBI) conference in London October 25, 2010. REUTERS/Toby Melville

(Reuters) - The chief executive of BAE Systems has told employees he was concerned about the impact on Europe's biggest defence contractor if Scotland breaks away from the United Kingdom, as a formal campaign for a Scottish independence vote began on Friday, The Telegraph reported.

Ian King addressed the issue of uncertainty surrounding the possibility of Scotland breaking away in an internal blog to staff on Friday. (http://link.reuters.com/nyk79v)

King said that "if Scotland became independent, we would no longer have that certainty and stability. We would then have to talk to our major UK customer, the Ministry of Defence, and jointly work out a plan for the future," according to the paper.

He said that Scottish independence would raise a range of uncertainties, and added that given the many decisions that would need to be taken by governments in Westminster and in Scotland, he could not be specific about the implications for BAE's business, employees, suppliers or customers.

King said the issue of pension schemes would be "especially complex".

King said "if Scotland became independent and subsequently joined the European Union, our pension schemes, along with many other UK company schemes, may be caught up in EU regulations relating to cross-border pensions.

"The reality today is we cannot say how our pension schemes would be affected. There would be a number of possible outcomes and we would use our consultation processes to discuss the options," he wrote in his blog.

Polls show Scots are unlikely to vote to quit the union, with roughly 40 percent against independence and 30 percent in favour. But there are still enough undecideds to swing the vote.

Edinburgh-based insurer Standard Life Plc and Britain's Royal Bank of Scotland have hinted about moving some operations out of Scotland to protect themselves from upheaval if Scots vote for independence.

Energy heavyweights Royal Dutch Shell and Aggreko Plc have also urged Scotland to stay in the United Kingdom.

Europe's biggest home improvements retailer Kingfisher Plc joined the chorus on Saturday and said that a vote for independence from the United Kingdom would make Scotland a less attractive place in which to invest.

(Reporting by Aashika Jain in Bangalore; Editing by Eric Walsh)