ANK will leave the UK as a result of the Independent Commission on Banking’s (ICB) proposals, its chair Sir John Vickers claimed yesterday.
But his fellow ICB members broke ranks to suggest that other measures such as the UK’s balance sheet levy for banks could make lenders reconsider their domicile.
During the hearing of four ICB members before the influential Treasury select committee of MPs yesterday, a clear division arose between ICB members who believe that the treasury should repeal the levy and those who support keeping it in place.
Bill Winters said the government “should reconsider everything” it has put in place since the financial crisis in light of the ICB report.
“If [the levy] was intended to remove the implicit subsidy from the banking sector… then we’re dealing with that elsewhere and the levy should be removed,” he said, referring to the “implicit subsidy” banks get from a perceived government guarantee to bail them out.
However, Vickers and ICB member Martin Wolf suggested the levy had other benefits, such as raising cash for the government and, according to Wolf, making up for financial services “being under-taxed”. The Treasury had originally suggested that the levy was to make up for the “implicit subsidy”.