£18bn Wiped Off UK Bank Shares as Chancellor Healey Summons Bank Bosses Over Budget Tax Fears

More than £18 billion was wiped off the value of Britain’s four biggest listed banks on Thursday, as investors grew increasingly worried that lenders will be targeted with tax rises in the autumn budget, according to The Times.

The sell-off began in early trading as bank investors fretted over surging government bond yields, then accelerated in the afternoon after it emerged that Chancellor John Healey had summoned the bosses of the country’s leading lenders to a meeting next Tuesday. The talks fuelled speculation that Mr Healey is preparing to increase levies on the banking industry in his first budget on October 28.

Barclays closed down 4.1 per cent, HSBC fell 4.1 per cent, Lloyds lost 4.5 per cent and NatWest finished 5.4 per cent lower, with more than £10 billion knocked from HSBC’s market capitalisation alone, The Times reported.

The banks could prove an attractive target for the Chancellor, who has little room for manoeuvre, because of their robust profits, which have been buoyed in recent years by higher-for-longer interest rates. Both the Trades Union Congress and the campaign group Positive Money have called for a windfall tax on the industry to fund cost-of-living support for households.

The industry has lobbied aggressively against higher taxes. UK Finance, which represents lenders, has warned that heavier levies would contradict the government’s growth agenda and make Britain an international outlier, calculating that the total tax rate on a model corporate and investment bank in London is 46.5 per cent, compared with 39.1 per cent in Frankfurt and 27.9 per cent in New York. JP Morgan chief executive Jamie Dimon has also warned that hiking taxes on banks could push investment to other countries, while the Treasury declined to comment on budget speculation.

Sources

• The Times — Bank shares lose £18bn after Healey summons bosses to meeting
• Sky News via Gazette — Chancellor summons UK bank chiefs amid industry calls not to hike taxes
• NewsATW — Revolut and banking rivals urge Healey to raise tax surcharge threshold in budget