The Financial Services Advisory Board’s (FiSAB) annual report on Scotland, conveniently timed to coincide with Global Financial Services Week, attempts to paint a pretty picture north of the border. But surely it can’t be that rosy?

The report waxes lyrical about various educational initiatives designed to encourage a skilled financial services workforce, and the fact that the industry has grown by 96% since 1998. It’s predicting more success on the way this year.

The problem is that Scottish financial services grew just 2% in 2007 and the banking sector, the biggest employer in the Scottish industry, is showing signs of difficulty.

HBOS, for instance, has let go 92 people in its corporate banking department. This might be more of a canned project than a credit crunch meltdown, but Colin Grieve, managing consultant at Head Resourcing in Edinburgh, says this sector has ground to a halt on the recruitment front.

“The boutique fund managers do tend to be bolstering their teams, though,” he adds.

Nicholas Furse, at headhunters Odgers Ray and Berndtson, says a cautiously optimistic outlook is about right: “The asset servicing and custody parts of the industry are well placed to pick up more business from the City, and because Scotland’s got more of a diverse range of financial services sectors, it means if some bits are slow, such as corporate banking, others are more healthy. We’ve seen a lot of activity around wealth management recently.”

Scotland’s biggest financial services employers are the banking sector (which employs 45,000), life and pensions (14,000), fund management (9,000) and general insurance (6,000), says the report.

The total number employed in financial services is 86,000 – down from 106,000 in 2006 – but the report is quick to point out that this slump is down to a change in methodology, not a massive headcount cut…