Lloyds and NatWest Shares Fall on Reports of Bank Tax Rise

Lloyds Banking Group (LON: LLOY) and NatWest shares fell about 2% in early trading today after reports that the Chancellor may raise taxes on banks. At 09:40, Lloyds was 103.45p, down 2.27%, with a low so far of 103.00p. NatWest was 660.2p, down 2.05%, with a low so far of 657.6p.

The fall is not sector-wide. Barclays was essentially flat so far this morning, while HSBC and Standard Chartered were higher. By the desk’s calculation against the 9 October close, Lloyds and NatWest are still up 1.8% and 2.7% over five sessions, so the falls take back part of a recent rise.

Bank (at 09:40)	Price	Change
Lloyds	103.45p	-2.27%
NatWest	660.2p	-2.05%
Barclays	431.75p	-0.15%
HSBC	1428.4p	+0.51%
Standard Chartered	2132.5p	+0.21%

A BBC report said senior bank executives believe higher bank taxes are “on the menu”, even though Healey has described banks as “the crown jewels”. The Budget is about two weeks away. Banks already pay a 3% surcharge on top of 25% corporation tax, plus a levy on balance-sheet size, and the four biggest made about £15bn in profit in the first half of this year.

The BBC set out three routes to a higher bill.

Option	Estimated extra
Surcharge restored from 3% to 8%	Around £2bn
Moderate increase (Augar)	Up to £3bn
Moratorium on loss offsets	About £1bn

A loss-offset moratorium would suspend the practice of using past losses to cut current tax bills. The BBC says Lloyds has benefited from that practice, though the report does not tie any measure to today’s share moves. One executive called a moratorium “a lot more bearable”.

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Augar told the BBC’s Today programme there was “room for a moderate increase”. The industry is pushing back. UK Finance, the banking trade body, said:

further increases in bank taxes would weaken competitiveness, discourage investment and job creation, and work against the government’s ambition to deliver growth in every postcode

UK Finance

Dimon has also warned that the UK already has one of the highest bank tax burdens in the world.