Bank shares lose £18bn as Healey summons lenders to a pre-Budget summit
The Chancellor has called the chief executives of Barclays, HSBC, Lloyds and NatWest to a meeting on Tuesday, fuelling City fears of a tax raid on lenders at the Budget on 28 October.
More than £18bn was wiped off the value of Britain’s four biggest listed banks on Thursday, as investors bet that lenders will be hit with tax rises in John Healey’s first Budget.
The sell-off began in early trading on worries about surging government bond yields and accelerated during the afternoon after it emerged that the chief executives of the leading lenders had been summoned to a meeting with the Chancellor next Tuesday. Barclays closed down 4.1 per cent, HSBC fell 4.1 per cent, Lloyds lost 4.5 per cent and NatWest finished 5.4 per cent lower.
The chief executives of Barclays, HSBC, Lloyds Banking Group and NatWest Group have been asked to attend the meeting, first reported by Sky News. The bosses of Santander UK and Nationwide Building Society are also understood to have been invited. It will be the first such in-person meeting Healey has held with UK bank chiefs since he replaced Rachel Reeves as Chancellor in July.
The selloff is much more to do as well with concerns over the fiscal outlook of the UK as we head towards the budget later this month.Fiona Cincotta, senior market analyst, StoneX
The talks come ahead of the Autumn Budget on 28 October, which is expected to contain billions of pounds of tax rises. Banks make an attractive target because of their robust profits, which have been buoyed by higher-for-longer interest rates: tax paid by the banking sector rose 8.5 per cent to £39.1bn in the 2025-26 tax year, according to HM Revenue and Customs figures.
The FTSE 350 banks index fell 4.1 per cent on Thursday, set for its largest one-day drop since May 5, while the wider FTSE 100 dropped 1.48 per cent to a three-month low of 10,448.78. The yield on the 30-year gilt surged to 5.9773 per cent, its highest since early 1998, and the benchmark 10-year gilt climbed to 5.449 per cent, the highest since 2007. The Treasury declined to comment when contacted by Reuters.
The Trades Union Congress and the campaign group Positive Money have both called for a windfall tax on banks to fund cost-of-living support, but lenders have lobbied hard against higher levies. UK Finance, the industry lobby, has told Healey that raising bank taxes would contradict the growth agenda, calculating that the total tax rate this year on a model corporate and investment bank in London is 46.5 per cent, compared with 39.1 per cent in Frankfurt and 27.9 per cent in New York.
“If we want the UK to thrive, we must ensure our operating environment attracts international capital rather than pushing it elsewhere,” said David Postings, the chief executive of UK Finance. JP Morgan chief executive Jamie Dimon has also warned against raising the banking surcharge, saying it could push investment to other countries.
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