Barclays, Citi, JP Morgan bosses sound alarm on bank tax
Rachel Reeves has been handed a warning by top banking chiefs to prioritise stability for the financial services industry amid speculation of looming tax hikes.
The bosses of UK banking giants have cautioned the Chancellor on potential tax rises and stressed the sector must remain competitive.
Barclays’ boss CS Venkatakrishnan – known as the Venkat – warned: “Competition is an important part of growth, which is why actually milking the financial sector is not good, because it stifles investment.”
“It stifles competition, stifles growth. We are sitting in the financial heart of London. London is one of the two great financial centers of the world. You need to encourage it to grow, not tax it out of existence,” he told CNBC.
Venkat has been a vocal opponent of further tax hikes along with the bosses of his FTSE 100 giant peers.
The Barclays’ chief previously pointed to the outsized tax rate slapped onto UK banks compared to their peers overseas and the importance of the banking sector in the wider economy.
Bank boss: Markets are impatient
Tiina Lee, the UK chief executive of Citi Bank, echoed the calls, adding markets were “impatient” for reforms and clarity.
Lee said Citi clients had called for a stable and competitive tax regime.
“That is the key message we continue to deliver to the government,” she added.
However, Conor Hillery, deputy chief executive at J.P. Morgan, spoke highly of the UK’s future prospects, branding the recent in flurry of investments from US financial giants as a “vote of confidence in the UK”.
London remains “the premier capital market in Europe”, Hillery added.
The anxiety surrounding a bank tax follows a summer of speculation, during which numerous think tanks, and most recently, the Liberal Democrats, have called on the government to launch a cash grab on lenders.
Reeves is expecting to be staring down a fiscal black hole of over £20bn come the Budget and a handful of economists have cited banks as a ‘politically safe’ cash grab the Chancellor could make.
However, such a move would be viewed as contradicting the Treasury’s ambition to place financial services at the “heart” of its plan for economic growth.
Already in London, banks face a total tax rate of 45.8 per cent – sitting well above Amsterdam (42 per cent), Frankfurt (38.6 per cent), Dublin (28.8 per cent) and New York (27.9 per cent).