PRESS: UK chancellor leaves banks guessing over windfall tax - Times
UK Chancellor John Healey has told bosses of Britain's biggest banks that the government faces a difficult fiscal position but has yet to decide whether to increase taxes on the sector, the Times reported on Tuesday.
According to the newspaper, Healey met executives from lenders including Barclays PLC, HSBC Holdings PLC, Lloyds Banking Group PLC, Nationwide Building Society and NatWest Group PLC on Tuesday morning, amid growing City speculation that banks could face a tax increase in his first budget later this month.
Bank executives warned Healey about the potential effect of a windfall tax on investor sentiment towards the UK, the Times reported.
One person familiar with the talks said there was broad recognition that most shareholders in UK banks are international investors, alongside strong opposition to windfall taxes, which banks argued could make the UK less attractive as an investment destination.
HSBC Chief Executive Georges Elhedery, who attended the meeting by video link, also highlighted the difficulties banks face in managing shareholder sentiment, according to two sources cited by the newspaper.
Elhedery pointed to HSBC's experience with Chinese insurer Ping An Insurance Group Co of China Ltd, which had pushed for the bank to separate its Asian and western operations. HSBC's board opposed the proposal, and it failed to gain sufficient support from other shareholders.
The meeting in Downing Street lasted just under an hour and was led by City Minister Lucy Rigby, the Times said.
Healey was described as being in "listening mode". At the end of the meeting, he reiterated that the government faced a tough fiscal backdrop but said decisions on taxation had not yet been taken.
"Nobody came out any the wiser" about whether banks would be targeted in the budget, one person familiar with the discussions told the newspaper.
Industry body UK Finance has also warned that increasing taxes further could encourage international banks to move investment away from Britain.
According to calculations by UK Finance cited by the Times, the total tax rate in 2026 for a model corporate and investment bank operating in London is 46.5%, compared with 39.1% for a lender in Frankfurt and 27.9% in New York.
Shares in Barclays rose 0.9% to 450.50 pence on Tuesday. Lloyds Banking was 1.0% higher at 105.00p, while NatWest rose 0.2% to 664.60p and HSBC gained 0.9% to 1,472.20p.
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