New bank tax to cost Nationwide £10bn in lending

Nationwide has announced that the impact of the proposed changes to the bank levy and introduction of a tax surcharge on banks will cost the society around £300 million over the next five years.

Related topics:  Finance News
Rozi Jones
18th August 2015
Nationwide, bank

In its interim statement, Nationwide's chief executive Graham Beale said that this is equivalent to the capital required to support about £10 billion of lending, and that the impact will be larger in earlier years.

The changes to the bank levy, announced in the July budget, involve introducing a new 8% surcharge on bank profits from the 1st January next year.

George Osborne said:

"Our bank levy was introduced to raise revenue and increase the stability of balance sheets, and it’s worked – but now it risks doing harm unless we change it.

"So I will, over the next 6 years, gradually reduce the bank levy rate – and after that make sure it no longer applies to worldwide balance sheets."

It has been speculated that the move has come in response to Standard Chartered discussing moving its headquarters from the UK after the Chancellor increased the bank levy by a third. In April, HSBC also announced plans to move its headquarters out of the UK as a result of 'regulatory and structural reforms', after announcing it would seperate its UK retail arm from its global operations.

Graham Beale added:

“The proposed changes to the bank levy and introduction of the tax surcharge on banking companies announced in last month’s budget may benefit UK headquartered international banks but will have a disproportionate effect on building societies such as Nationwide. This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular.”

In its Interim Management Statement covering the three month period from 5 April 2015 to 30 June 2015, Nationwide revealed that gross mortgage lending for the quarter increased 17.2% to £6.8 billion, while net lending increased 23.5% to £2.1 billion taking total mortgage balances to £154.9 billion.

Underlying profit before tax increased 52% to £400 million and statutory profit before tax rose 50% to £379 million.

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.