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As Treasury prepares RBS sell-off

Osborne ready to ‘phase out’ bank levy in appeal to HSBC

George OsborneChancellor George Osborne may be preparing a u-turn on the bank levy in order to head off HSBC’s plan to leave the country.

Mr Osborne is expected to use his annual Mansion House speech to water down the yearly charge on the banks in an attempt to persuade Britain’s biggest bank to retain its headquarters in London.

His move, however, may prove to be too late as the bank has already set the wheels in motion by unveiling plans to hive off the UK bank and taking a long lease on property in Birmingham for its UK head office. It is also unhappy about the ‘ringfencing’ of retail banking from investment banking which will incur a huge cost.

The levy, which Mr Osborne introduced in his first budget in 2010, has proved a final straw for HSBC which gets hit hard because it is based on worldwide assets, not profits, and the bank makes a smaller proportion of its profits in Britain.

Mr Osborne has raised the levy eight times, and his expected move tonight to phase it out is unlikely to cut much ice with HSBC.

He is also likely to unveil details of plans to begin selling shares in Royal Bank of Scotland. The bank is trading at a loss on the government’s holding but Mr Osborne wants to get the bank off the Treasury’s books.

 

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