Lending to Scots could pause with 'yes' vote amid currency concern

* Banks see pause in lending if Scots back independence

* Uncertainty over currency of an independent Scotland

By Steve Slater and Matt Scuffham

LONDON, Sept 12 (Reuters) - Scots may find it harder to getmortgages and other loans if they vote to separate from theUnited Kingdom next week, with banks likely to cut lending whilethey assess currency and other economic risks, bank industrysources said.

The sources, who asked not to be named due to thesensitivity of the matter, said it was impossible to say howlong any pause or reduction in lending might last, but it couldbe lengthy if the currency question was not quickly clarified.

"If someone wanted to get a mortgage soon after a 'yes' votethere may be a need to pause and say we need greater clarity oncurrency, and I think that's true of everybody," said one of thesources at a major bank.

Scots are due to vote on independence on Sept. 18. If theyvote 'yes', Scotland and the rest of the United Kingdom wouldhave 18 months to work on resolving outstanding economic issues,such as what currency Scotland would use.

The Scottish National Party (SNP), which is leading theindependence campaign, has said it would like to continue usingthe pound in a currency union with the rest of the UnitedKingdom, but London has said it would not agree to this.

That could mean an independent Scotland using the poundwithout the consent of London, and thereby having no influenceover the currency and interest rates; setting up its owncurrency; or trying to join the euro.

The sources said the uncertainty could make banks reluctantto commit to long-term loans such as mortgages.

"There clearly are massive uncertainties. When you haveanything major like this happening, the natural consequence isto step back and have a think about plans," said Ray Boulger,senior technical manager at mortgage broker John Charcol.

"I suspect that you would see some lenders restricting theircriteria one way or another."

RISKS

Jayne-Anne Gadhia, the chief executive of Virgin Money, saidit had looked at the impact of the referendum and there was alot of uncertainty about how it could affect business.

"I don't know what will happen to Scottish customers'mortgage and credit card rates because I don't know what willhappen to the currency," she told Reuters.

"This will be one of the very many issues that are going tohave to be resolved should there be a 'yes' vote and, at themoment, I think it is completely unresolved because of thecurrency position."

The latest polls show a slim majority of voters in favour ofkeeping Scotland in the United Kingdom.

Scotland's major banks this week said they would move theirheadquarters to England in the event of a vote for independence.

The SNP has accused the 'no' campaign of scaremongering, andbelieves London might change its position on a currency union inthe wake of an independence vote.

The bank sources said that if an independent Scotland optedfor a new currency, there was a risk it might fall in value.

Risks from a change in currency could require new clauses tobe inserted into loan agreements, they said.

Hungary's banks have been hit hard since the 2008 financialcrisis by a devaluation of its currency, after borrowers hadtaken out mortgages in Swiss francs and subsequently struggledto repay in the stronger currency.

One option for banks in Scotland could be to ask for greaterminimum deposits for mortgages to reflect greater risk, onebanker said.

Uncertainty about Scotland's economic outlook in the eventof independence could add to banks' reluctance to lend.

"It's understandable banks will step back given theuncertainties," one analyst said. (Editing by Mark Potter)