Natwest and HSBC shares dip as bank tax chatter heats up
Shares in Natwest and HSBC dipped on Monday morning as traders digested renewed chatter of a tax hike on Britain’s banking giants.
Natwest tumbled as much as 1.3 per cent to 506p when markets opened, while HSBC fell 0.6 per cent to 1,022p.
Barclays fell nearly 0.2 per cent to 381p.
Lloyds was broadly flat in early trading.
Over the weekend, the Liberal Democrats joined lobbying efforts to slap a fresh levy on the country’s banking behemoths.
Daisy Cooper, the party’s Treasury spokesperson, called for an annual £7bn tax grab on the lenders, citing recent profit figures from the country’s biggest lenders.
Last month, the FTSE 100’s top banks lost over £8bn in market value in a day’s trading session as speculation mounted over a new levy.
Natwest led the blue-chip index’s fallers with a five per cent plunge, wiping nearly £2.5bn off its market value.
Bank tax ‘most likely’ tax raid
Britain’s Big Four banks booked £50.3bn in profit in 2024, an all-time high and City analysts believe lenders could surpass this total in 2025
Cooper said a windfall tax would allow for homeowners and small businesses to “do the right thing” and invest in solar panels, heat pumps and insulation.
Earlier this month, Ruth Gregory, deputy chief UK economist at Capital Economics, said banks would “bear the brunt of higher taxes” in the upcoming Autumn Budget.
Gregory said a hike in the bank surcharge and a levy on firms’ profits from quantitative easing are the two most likely tax rises in November’s budget.
The calls from the Liberal Democrats join left-wing think tax the Institute for Public Policy and Research and monetary reform group Positive Money.
Both groups have urged the government to impose new taxes on the banks; however, they have faced a stark backlash from the industry.
The chiefs of Britain’s biggest banks warned earlier this year that further taxation would dent the Chancellor’s central ambition for economic growth.
Natwest’s Paul Thwaite warned “strong economies need strong banks” as he argued he would rather use the bank’s capital for loans to boost growth “for the good of the country”.
CS Venkatkrishnan, Barclays’ chief executive, argued banks were “already among the biggest tax payers in this country”.
Banking industry body UK Finance has pushed for a friendlier tax environment, noting the rate in London dwarfs rivals overseas.
A report from UK Finance and PwC found that for every £1 of taxes levied on banks’ profits through corporation tax, another £1.59 is collected through the banking surcharge, levy, social security payments and irrecoverable VAT.