ING’s new UK head says the bank remains committed to “significantly growing” its business in the UK even if chancellor Rachel Reeves includes a bank levy in her upcoming Autumn Budget.
Shares in UK banks fell sharply last week on mounting speculation that Reeves may target a tax raid on banks.
The drop followed a proposal from the Institute for Public Policy Research calling on Reeves to impose a “Thatcher-style tax on bank windfalls” that it said could raise £8bn per year to help plug a growing hole in public finances. Trade unions have also called for higher taxes on bank profits.
A bank tax cannot be ruled out, Alexandra MacMahon, country manager for ING’s UK wholesale business, told The Banker. “You can’t take anything off the table. [But] it doesn’t change our commitment to the UK.”
Her comments come as the chief of trade body UK Finance warned Reeves that tax hikes would harm the sector’s “international competitiveness”.
According to Sky News, in a letter to the chancellor, David Postings, UK Finance’s chief executive, said its analysis reveals that the UK’s “total tax rate” for corporate and investment banks is already “notably higher” than other major financial centres such as Amsterdam, Frankfurt, Dublin and New York.
MacMahon said it is unclear at what threshold a banking levy or tax would kick in. However, from a balance sheet perspective, ING is much smaller than some of the larger UK clearing banks, she said.
As a large organisation active in a lot of countries, Eva Smolen, the bank’s head of wholesale banking for Emea, said ING has the ability to absorb a bank tax.
Speaking to press at ING’s UK headquarters on Thursday, MacMahon and Smolen outlined plans to “substantially grow” the bank’s UK business.
“We are underpenetrated in the UK, relative to other commercial banks here in London,” said McMahon, who joined the Dutch bank six months ago from Santander where she headed its UK corporate and investment bank.
Outside its core markets of the Netherlands, Belgium, and Germany, ING’s UK operations were the sixth-largest earner in the rest of Europe last year, based on total income, according to its latest annual report.
McMahon said ING needed to do a better job of delivering capabilities to its UK client base and increase its fee-based business.
While it counts 60 per cent of the FTSE 100 as clients, McMahon said the ambition is to add more clients by investing in banking coverage teams.
She also flagged infrastructure and renewable investment opportunities, saying the bank’s global head of renewable energy had relocated to the UK from Amsterdam to capitalise on these opportunities.