As the UK bank levy, was increased by George Osborne for the ninth time since its introduction in 2011, in in March’s budget, foreign banks based here are planning to retreat from practices here, in an attempt to avoid the levy. Balance sheet tax currently sands at 0.21 per cent and HSBC and Standard Chartered, both UK based, have been quite open about the fact that they are planning to move their head quarters over seas, most likely to Asia and it appears that others are now beginning to follow suit. Foreign banks are obligated to pay a charge that applies only to their UK balance sheets which gives them the freedom to exercise City based processes elsewhere.
Banks that are reported to be investigating the issue include Citigroup, JPMorgan and UBS. Head of the Bankers Association has said that due to the levy which continues to rise, ‘it is becoming uneconomic to do some business in the UK.’ Industry figures have talked about, for example the inflammatory effect that repo-transactions can have on balance sheets which, in light of the higher percentages, seems unnecessary.