Publicly-traded British challenger banks suffered their worst day on record yesterday, as chancellor of the exchequer George Osborne said yesterday that a new corporation tax surcharge would take a significant chunk out of the industry’s profits.
Reading-based retail bank Aldermore, which floated on the London Stock Exchange earlier this year, saw its share price fall by nearly 15 per cent. Virgin Money, which is part-owned by Virgin Group and is also listed in London, likewise saw its shares tumble, closing down nine per cent for the day.
Shawbrook and OneSavings Bank both saw their share prices fall just over 10 per cent.
Earlier in the day, Osborne used his summer Budget to announce a “corporation tax surcharge” of eight per cent more than the existing corporation tax for the entire British banking sector.
Under the government’s new policies, challenger banks will pay a corporate tax rate of 28 per cent next year, going down to 26 per cent by 2020.
Ian Gordon, head of banks research at Investec, told City A.M. that the move was “surprising,” saying, ““The market didn’t see it coming.”