HSBC chief executive Georges Elhedery has cautioned Chancellor Rachel Reeves against increasing taxes on banks, warning it could “erode” investment and ultimately harm UK growth. His comments come amid speculation that Reeves may raise bank taxes in the autumn budget.
Elhedery noted that UK banks already face the highest tax rates on profits compared to other sectors and pay more than in most other countries. He said additional taxation “does run the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK.”
The intervention follows a similar warning from Lloyds Banking Group CEO Charlie Nunn, who said higher taxes could damage Labour’s plans for the City to drive economic recovery. UK banks currently pay 25% corporation tax plus a 3% surcharge and a levy on balance sheet assets, resulting in an estimated total tax rate of 45.8%, compared to 38.6% in Frankfurt and 27.9% in New York.
HSBC reported a 29% drop in second-quarter pre-tax profits to $6.3bn, partly due to a $2.1bn impairment on its stake in China’s Bank of Communications and a $400m charge linked to Hong Kong’s commercial real estate sector. Despite the drop, the bank announced a dividend of 10 cents per share and a $3bn share buyback.
