Challenger bank Arbuthnot Banking Group yesterday warned higher taxes on bank profits will hurt lending to the real economy
The firm, owner of private bank Arbuthnot Latham and half-owner of listed entity Secure Trust Bank, also called on chancellor George Osborne to calculate bank taxes on the size of their balance sheets.
The introduction of an eight per cent surcharge on bank profits, announced in the summer budget earlier this month, would also have the unintended consequence of driving capital towards the shadow banking sector, Arbuthnot’s group finance director James Cobb said.
“Given the fact that one of the best routes for us to generate capital is via our profits, this bottom line charge impacts our ability to generate capital, and therefore our ability to grow next year. It must slow our growth as a direct consequence. This will act as a brake on the challenger bank sector.”
The warning came after it revealed solid growth across its business. Pre-tax profit for the half year ending June was up 65 per cent to £15.7m. Customer loans rose to £1.4bn from £842m and deposits were up to £1.6bn from £1.1bn.
Secure Trust Bank, which alone saw a 40 per cent increase in pre-tax profits, raised £75m in a fundraising last year to lend out to small firms.