Investing.com -- Shares in British lenders fell on Friday after The Guardian reported that finance minister John Healey plans to raise taxes on banks in his Oct. 28 budget, with Lloyds down 2.3% and NatWest down 2.05% as of 04:40 ET (08:40 GMT).
The Guardian said Healey wants to offset damage to public finances from the Middle East war and keep deficit-reduction plans on track as borrowing costs rise.
One option is reversing cuts to the bank surcharge made by Jeremy Hunt, which would raise more than £2 billion a year.
The surcharge is an extra tax on bank profits on top of corporation tax. Industry figures believe it will probably rise to 8% from 3%.
One industry source said banks expected a rise to 8% but no further. The Trades Union Congress (TUC) estimates that would raise £2.25 billion a year, but has lobbied for 16%, which it says could raise £24 billion over the next four years.
TUC General Secretary Paul Nowak said the big four banks were making "a billion pounds a week". HSBC, NatWest, Barclays and Lloyds Banking Group made £200 billion in pre-tax profit over the past five years as interest rates rose.
Healey, speaking to reporters in Bangkok, praised the banks as crucial to supporting economic growth, saying they are "hardwired into the economic fabric of this country and our future prospects."
Bank bosses met Healey last week and were given no assurance that tax rises were ruled out. Their lobby groups, UK Finance and TheCityUK, then wrote to him saying higher taxes would force them to move staff and business out of the country.
JP Morgan Chief Executive Jamie Dimon said in May he could scrap plans for a £3 billion London headquarters, which would house more than half of its 23,000 UK staff, if the government became hostile towards banks.
Specialist banks including Revolut and Shawbrook want the profit threshold for the surcharge raised from £100 million to £500 million.
Borrowing costs have risen sharply in recent weeks, which analysts said could as much as halve the £24 billion cushion Rachel Reeves, Healey's predecessor, built against fiscal rules in March.
Healey said he wanted his first budget to give "breathing space" to consumers and businesses facing rising energy prices.
Original Article
UK bank shares fall on report of potential tax hike in Oct. 28 budget
Here are the latest additions to UBS' 'Pan-European Small & Mid-Cap' list
Verbio shares jump 10% as Jefferies sees biodiesel margins boosting earnings
