The British Chancellor has concluded that the banks are in better shape than he thought they would be by now, and have recovered better from the financial ‘crash’ of 2008/09 that he expected. So whilst the green-eyed monsters of the average joe turned red with anger at the bank-bonus-season handouts, the taxman cometh at the hour even for the banks.
Actually, this turn around in opinion has taken far less than two years to be reached. More like just two months. In fact, it was just a few short weeks back when George Osborne announced that a smaller levy would apply to the banks in the current year. There go those green-eyed monsters….!
But things must be looking up for the Banks …. and consequently for the Treasury too.
In his wisdom, the Chancellor has decided that he should impose the full levy AND to do this with immediate effect. This will “extract” £800m more from the banks in 2011 than he had been planning to – a whopping £2.5bn per annum in 2011, with £2.6bn in both 2012 and then 2013. The Royal Bank of Scotland, for example, will pay £473m (that’s up by £150m from last year). Better days.
Let’s put this in some perspective with the help of that unpopular editor Robert Peston at the BBC says – “By way of context, the additional £800m of levy for (just) 2011 equates to around 13 per cent of the aggregated value of the big banks’ bonuses”. Remember, that the banks handed out around £6bn in bonuses to their investment bankers. OK, so not tooooo painful a hit then for the good old banks (sic).
The increased levy is only one element in a raft of initiatives to reach what The Chancellor has termed a “settlement” with the banks. These initiatives are part of the aptly named ‘Project Merlin’ (it’s going to take some wicked magic!) which includes a ‘through-gritted-teeth’ pledge from the banks to offer up £190bn of credit to businesses in 2011.
Better days indeed? We wait with baited breath.
Bob
February 9, 2011
Doc Roger. You flagged this up before it hit the news yesterday. Well spotted.
From what I could see it seems these ‘negotiations’ have been going on for weeks. How about we all get to negotiate with the taxman how much we’re willing to pay. Daft, and running scared. If it’s true then letting the banks do their bonus bonanza will mean they have to lend £190bn in 2011 (did anyone notice we’re already 10% into the year?!) of which £76bn will be to SMEs.
And if the banks have to disclose the pay of the board members and the pay and bonuses of the 5 most senior employees just below board level, this will make Britain having the most transparent pay disclosure in the world.
The banks are claiming they’re being good and the bonus-bucket is actually lower his year. A pledge they say they are keeping. Good chaps! Or is it simply that the banks made less profit last year so the bonuses would have been less anyway?