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TSB says George Osborne's bank profits tax could hurt smaller outfits | TSB says George Osborne's bank profits tax could hurt smaller outfits |
(about 1 hour later) | |
TSB has warned that George Osborne’s new tax on bank profits will hit companies challenging established high street brands and has urged the chancellor to water down the measure. | TSB has warned that George Osborne’s new tax on bank profits will hit companies challenging established high street brands and has urged the chancellor to water down the measure. |
The 8% surcharge on bank profits announced in the budget will spread the tax burden more widely across the sector, with smaller banks paying an industry tax for the first time. It will kick in at annual profits of £25m, which has prompted TSB to warn of an impact on so-called challenger banks such as itself, Virgin Money, Aldermore and Shawbrook. | The 8% surcharge on bank profits announced in the budget will spread the tax burden more widely across the sector, with smaller banks paying an industry tax for the first time. It will kick in at annual profits of £25m, which has prompted TSB to warn of an impact on so-called challenger banks such as itself, Virgin Money, Aldermore and Shawbrook. |
TSB’s chief executive, Paul Pester, said: “We are supportive of the new tax, the government’s approach, because we think it’s appropriate that banks continue to support society. But we are encouraging the Treasury to think again on the lower limit.” | TSB’s chief executive, Paul Pester, said: “We are supportive of the new tax, the government’s approach, because we think it’s appropriate that banks continue to support society. But we are encouraging the Treasury to think again on the lower limit.” |
He called for the profit threshold to be raised to £200-£250m, arguing that the surcharge would hit smaller banks such as TSB, which might make an annual profit of £100m. The “real income” for the Treasury would come from the bigger banks’ multibillion-pound profits, he noted. | |
“We’re making our view clear to the Treasury that this takes a big chunk out of our profit,” Pester said. “Policymakers could do a bit more to help growing banks. We are having a very positive discussion. Let’s watch this space.” | “We’re making our view clear to the Treasury that this takes a big chunk out of our profit,” Pester said. “Policymakers could do a bit more to help growing banks. We are having a very positive discussion. Let’s watch this space.” |
Along with the surcharge, Osborne also announced a scaling back of the bank levy, which has raised £8bn since 2010. Big lenders will be the main beneficiaries of the move. | Along with the surcharge, Osborne also announced a scaling back of the bank levy, which has raised £8bn since 2010. Big lenders will be the main beneficiaries of the move. |
TSB was spun out of Lloyds Banking Group and has just been bought by Spain’s Sabadell. It made a statutory profit before tax of £23.2m in the first half of the year, down 44.4%, due to lower loan balances, the Financial Services Compensation Scheme levy charge of £14.8m and costs related to the takeover. | TSB was spun out of Lloyds Banking Group and has just been bought by Spain’s Sabadell. It made a statutory profit before tax of £23.2m in the first half of the year, down 44.4%, due to lower loan balances, the Financial Services Compensation Scheme levy charge of £14.8m and costs related to the takeover. |
It highlighted its mortgage performance, having received £1.9bn of mortgage applications through brokers in the first half, with gross lending totalling £665m. The lender, which has 631 branches and 4.6 million customers after launching nearly two years ago, accounted for 6.7% of all new and switching bank accounts in the last quarter, beating its own targets for the sixth quarter. It has also launched a new mobile banking app and extended Saturday opening hours. | It highlighted its mortgage performance, having received £1.9bn of mortgage applications through brokers in the first half, with gross lending totalling £665m. The lender, which has 631 branches and 4.6 million customers after launching nearly two years ago, accounted for 6.7% of all new and switching bank accounts in the last quarter, beating its own targets for the sixth quarter. It has also launched a new mobile banking app and extended Saturday opening hours. |
Pester, who is staying in his job after the Sabadell takeover, said it would give TSB extra financial fire power in its mission to break the stranglehold of the four big lenders in UK banking: Lloyds, Royal Bank of Scotland, HSBC and Barclays. He added that Sabadell had been successful at moving a string of acquisitions in Spain and the US on to its IT systems, and pointed to the Catalan bank’s small-business banking expertise. | |
Sabadell was founded in 1881 by 127 family businesses around Barcelona and has grown rapidly since the financial crisis to become Spain’s fifth-largest bank. | |
The impact of the takeover on jobs would be minimal, Pester reiterated, as Sabadell does not have an operation in the UK. |
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