- Reeves' budget avoids new bank taxes, easing sector fears
- OBR document omits mention of bank tax increase
- UK bank shares steady, have rallied 62% since Labour took power
LONDON, Nov 26 - Shares in some British banks slipped on Wednesday despite finance minister Rachel Reeves appearing to have spared them from fresh targeted taxes, following months of speculation she might increase a levy on the sector to help plug the gap in public finances.
A document from Britain's Office for Budget Responsibility, analysing the budget and published unexpectedly ahead of Reeves' speech, made no mention of any tax increase specific to banks.
Fears among finance executives that Reeves might tap lenders to help her out of a fiscal hole rose in August after a think-tank called in August for a new levy on the interest lenders earned from deposits held at the Bank of England, sending their shares down sharply.
Bank stocks have since rallied after media reports downplayed the likelihood of fresh taxes on a sector which Reeves is hoping to cajole into lending more to businesses in order to fuel growth, a key plank of Labour's agenda.
Bellwether domestic lenders Lloyds Banking Group and NatWest slipped 0.6% and 1% respectively on Wednesday on broader concerns about the impact of the budget, while more internationally-focused HSBC and Barclays were broadly flat.
The apparent decision marks a repeat of Reeves' first budget a year ago, when lenders similarly feared a raid on their profits which never materialised.
British banks have enjoyed a run of bumper profits in the years since the COVID-19 crisis in 2020, as interest rate hikes in the aftermath of the pandemic fuelled their lending margins while households and businesses proved more robust than expected, helping lenders avoid defaults.
That run has continued since Labour won the general election in July 2024, with a FTSE index of British bank shares up 62% since then.
Reporting by Lawrence White; Editing by Tommy Reggiori Wilkes and Iain Withers
Source: Reuters