Citi chief Jane Fraser warns UK tax hikes could spur banking exodus

During her first visit to Britain since being made a Dame in June, Citi chief executive Dame Jane Fraser told reporters that a rise in taxes on the banking sector could make London a less attractive base for global banks.

Fraser highlighted that the city’s effective tax rate sits at about 48 per cent, a level she says is no longer competitive with other financial hubs. She contrasted this with rates of roughly 27 per cent in New York, about 28 per cent in Dublin, and lower levels in Frankfurt and Paris, noting that "money votes with its feet".

She added that the widening gap has turned the decision to stay in Britain into "a tougher decision" for multinational banks.

Industry reaction

The warning joins a growing chorus of concerns from Wall Street leaders. Barclays and JPMorgan Chase have issued similar cautions, with JPMorgan chief executive Jamie Dimon saying the bank could scrap plans for a new headquarters in Canary Wharf if the tax burden rises.

Both institutions reported near‑record investment‑banking and trading revenues in the second quarter, a performance that Fraser said is likely to increase political scrutiny of the sector.

Economic stakes

Financial services generate roughly £75bn in tax each year and employ more than a million people in the UK. The Treasury therefore faces a delicate trade‑off between raising public finances and preserving the City’s global edge.

Fraser also voiced unease about proposals from ministers to introduce a wealth tax and to align capital‑gains tax with income‑tax rates, recalling the high‑tax era of the 1970s as a "disaster for the country" that hampered growth and business formation.

Fraser’s track record

The Scottish‑born executive took charge of Citi in 2021 and has overseen a restructuring that shed non‑core businesses while sharpening focus on wealth management, commercial and investment banking. The strategy appears to be delivering results: trading revenue rose 45 per cent to $2.3bn in the second quarter, and four of the bank’s five main divisions beat expectations in the first half of the year.

She told reporters, "It's not just that we got ourselves into shape and we built the engine, now we've got to show what we can do."

Policy outlook

The government has not ruled out additional levies as it works to repair public finances, and the upcoming autumn budget will be closely watched for any signals on the bank surcharge, the bank levy or changes to capital‑gains tax. Fraser’s intervention, backed by her turnaround record and her rare status as a Briton heading a major US bank, is likely to ensure the City’s concerns are heard at the highest level.

first reported by the source report