Don’t hike bank taxes, Barclays warns Burnham
Barclays has warned Andy Burnham not to slap fresh taxes on banks, as fears grow the new prime minister could take advantage of lenders’ bumper earnings to launch a raid on the sector.
Speaking after Barclays’ half year results this morning, executives warned that banks already faced the highest rates of tax globally and saddling them with further charges could damage investment opportunities.
Chief executive VS Venkatarishnan said the bank welcomes Burnham’s sweeping “commitment to growth” but warned it wishes to use its capital to “support investment” rather than pay tax.
Anna Cross, finance director at Barclays, said: “The track record that we and other banks have in terms of supporting UK growth…is really important for the health of the economy and we hope that will be considered.”
Fearing a cash grab
Fears of a possible raid on UK lenders has been fuelled by what is anticipated to be a booming earnings season for banks, after turmoil in global markets boosted equity trading and investment banking income.
Barclay’s equity trading division was up 45 per cent in the second quarter, but this trailed that of Wall Street rivals who were up an average of 69 per cent over the period following the blockbuster Space X IPO.
The Chancellor John Healey met with Venkatarishnan and other bank bosses last week to discuss the government’s growth plans. Burnham and Healey have neither ruled out or firmly signalled they will be hitting the banks with higher taxes at the budget.
Speaking to reporters today, the Barclays chief said he was pleased to hear Healey’s commitment to “growth in every postcode.”
But the Barclays executives’ warnings mean they join a chorus of bank bosses who have urged the government not to rely on lenders for a quick cash grab.
Ana Botin, chief executive of Santander, recently questioned why banks should be “singled out” and said that there were other places for the government to find funds.
This was echoed by JP Morgan boss Jamie Dimon, who warned the lender’s £10bn Canary Wharf tower plans could be threatened by higher taxes.
“I would be very cautious if I was a government thinking that penalising any company out of the ordinary is a good thing for that country,” he said.
Beefed up bonuses
Barclays allocated £1.3bn towards its bonuses in the second quarter, up from £1bn last year, after granting high-performers hefty payouts.
Cross argued that the increasing bonus was purely “mechanistic”, as the bank approves the compensation amount as the year progresses.
Lloyds and Natwest are set to release their results later this week.