S&P says it would be 'challenging' for Edinburgh government to support its banks without backing of London

An independent Scotland would need the support of the UK Treasury and the Bank of England to prevent savers in its banks being as vulnerable as those who had money in Iceland during the 2008 financial crisis, according to one of the three leading credit rating agencies.

In a detailed analysis of where the Scottish banking system would stand after a yes vote, Standard & Poor's concluded it would be "challenging" for a government in Edinburgh to support its banks without the backing of London because their assets would be 12 times as big as the country's output – far higher even than Iceland's banks before their crash.

Although the Conservatives, Labour and the Liberal Democrats have insisted that Scotland will have to go it alone if it votes yes in September's referendum, the ratings agency said it would be very difficult for Scottish banks if this were the case. At the time of the crash, Brussels obliged all EU countries to guarantee €100,000 – or £85,000 – of a saver's money in the event of a bank collapse.

The pro-independence camp says a deal will be struck that allows the Bank of England to continue setting interest rates and acting as a lender of last resort for the whole of the UK.

In a carefully worded report, S&P said its view would depend on the outcome of talks with Westminster after a yes vote. "If an independent Scotland were to join a currency union with the remaining UK, we assume that regulation would remain under the Bank of England and that financial services compensation scheme [FSCS] coverage would be unchanged. Alternatively, Scotland would very likely be required to set up its own deposit insurance arrangements if it adopted the euro."

The report said it was not clear how an independent Scotland would finance these deposit schemes. The FSCS covers UK banks and relies on loans from the Treasury as well as the banking industry.

If Scotland joined the EU, it too would need to find the means to provide this guarantee. But S&P said: "However, these arrangements would likely be unfunded, leaving the comparatively very sizeable deposit bases of the largest Scottish banks backed with an implicit guarantee by the Scottish government. We note a possible parallel here with Iceland, where in 2008 the national deposit insurance scheme could not honour claims when the country's outsized banking system failed."

While the ratings agency did not say it would downgrade Scottish-based banks, it set out a number of "important considerations" that it would look at when assessing the creditworthiness of banks in an independent Scotland, where bailed-out banks Royal Bank of Scotland and Lloyds Banking Group have their registered head offices. These cover:

• The role and existence of a central bank;

• The credit strength of a new Scottish state and its access to the financial markets;

• Arrangements to protect depositors if a bank gets into difficulties;

• The ability and willingness of a Scottish government to provide help to systemically important banks under stress.

It added that with the exception of Iceland, all western European governments had pledged to stand behind their systemically important banks in the event of another crisis.

"In our view, the willingness and ability of a future Scottish government to support its banking system is challenging at this point," S&P said.

It cited Treasury figures showing that the Scottish banking system's assets are 1,254% the size of Scotland's GDP, which compares with "an already high 492% of GDP for the UK, and 880% for Iceland in 2007 just before the banking system collapsed".

When Iceland's three biggest banks collapsed in 2008, the country's depositor guarantee scheme was unable to repay hundreds of thousands of UK savers who had billions of pounds in high-interest accounts such as Icesave. Lloyds and RBS have already expressed concern about the risk of a credit downgrade in the event of a yes vote. "The impact of a yes vote in favour of Scottish independence is uncertain," Lloyds said in its annual report, adding that it could affect the cost to the bank of complying with regulations and its tax position.

When it published its results in February, RBS said: "A vote in favour of Scottish independence would be likely to significantly impact the group's credit ratings and could also impact the fiscal, monetary, legal and regulatory landscape to which the group is subject. Were Scotland to become independent, it may also affect Scotland's status in the EU."

Vince Cable, the business secretary, waded into the debate in February when he said that a yes vote would make it "inevitable" that Royal Bank of Scotland would relocate from Edinburgh to London. "If you were managing RBS, I think you would almost certainly want to be in a domicile where your bank is protected against the risk of collapse," Cable told the Commons business committee.

"They already have a substantial amount of their management in London and I would have thought, inevitably, they would become a London bank," Cable said.

Before the financial crisis Scottish first minister Alex Salmond had spoken of an "arc of prosperity" emerging across Europe's northern fringe linking Scotland, Ireland and Iceland.

The banking industry is not the only one that could potentially be affected by Scottish independence. Ben van Beurden, the boss of oil company Shell, has said he would prefer Scotland to remain in the UK particularly as it would allow the UK's views to be heard in the EU. Fund management firm Standard Life, based in Edinburgh and with 5,000 employees in Scotland, has warned it will take "whatever action necessary" if there is a yes vote, including moving to England.