Britain prepares ‘to review bank tax to stop potential exodus’

LONDON - Reuters

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Britain is prepared to review a tax on banks to head off the threat that large multinational banks like HSBC could leave London’s financial center and shift their operations overseas, the Sunday Times reported, citing industry sources.

Finance minister George Osborne is to lay the ground for such a review in a speech this week, by saying that the newly-elected Conservative government is committed to maintaining the competitiveness of banks, the paper reported.

Both HSBC and Standard Chartered are looking at the viability of quitting London for Asia.

The Sunday Times report cited sources, including one of HSBC’s top five shareholders, as saying that a review of the tax could stall any move by the bank to leave London.

HSBC declined to comment on the report.

A finance ministry spokesman declined to comment directly on the report but said: “We are committed to maintaining our position as a global financial hub.

“As set out at the budget, it is right that, as it becomes more profitable, our banking sector makes a fair contribution to fixing the public finances,” the spokesman said.

A report in the Financial Times on June 6 said that Osborne would use his speech to say that financial regulation had now reached a sensible point.

In a March budget update, Osborne raised the bank tax for the eighth time since its introduction in 2011, increasing the rate to 0.21 percent of a bank’s assets from 0.16 percent.

The British Bankers’ Association has previously cited the tax as one of the factors making several banks rethink their operations.

Speaking in early May, HSBC warned that Britain’s bank tax was preventing it from raising dividend payouts and that was a key concern of investors as the bank makes an assessment of whether to move to Hong Kong from London.