Barclays has warned Prime Minister Andy Burnham against imposing fresh taxes on the banking sector amid fears the government could target lenders’ record profits.
Executives speaking after the bank’s half-year results cautioned that banks already face the highest tax rates globally, and further charges risk damaging investment.
Chief executive VS Venkatarishnan said the bank welcomes Burnham’s “commitment to growth” but stressed it wishes to use its capital to “support investment” rather than pay additional tax.
Finance director Anna Cross said: “The track record that we and other banks have in terms of supporting UK growth…is really important for the health of the economy and we hope that will be considered.”
Concerns over a potential government raid on UK lenders have intensified following what is shaping up to be a bumper earnings season for the sector.
Barclays’ equity trading division surged 45 per cent in the second quarter, though this trailed Wall Street rivals who averaged gains of 69 per cent following the blockbuster SpaceX IPO.
Chancellor John Healey met with Venkatarishnan and other bank bosses last week to discuss the government’s growth agenda, with neither Burnham nor Healey ruling out higher taxes at the forthcoming budget.
Speaking to reporters, Venkatarishnan said he was pleased to hear Healey’s commitment to “growth in every postcode,” striking a cautiously optimistic tone about the relationship.
Barclays joins a growing chorus of bank executives publicly urging the government not to treat the sector as a convenient source of quick revenue.
Santander chief executive Ana Botin recently questioned why banks should be “singled out” and suggested the government look elsewhere to raise funds.
JP Morgan boss Jamie Dimon went further, warning that higher taxes could threaten the lender’s £10bn Canary Wharf tower development plans in London.
“I would be very cautious if I was a government thinking that penalising any company out of the ordinary is a good thing for that country,” Dimon said.
Separately, Barclays allocated £1.3bn towards bonuses in the second quarter, up from £1bn in the same period last year, reflecting strong performance across the business.
Cross described the increase as purely “mechanistic,” explaining that the bank approves compensation amounts progressively as the financial year advances.
Lloyds and NatWest are both scheduled to release their own results later this week, with analysts watching closely for further signs of sector-wide profit growth.