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Summary
- The UK received a global tax exemption for its financial services firms from the group of seven’s recent global tax plans.
- Under the exemption, UK multination banks will not have to pay tax on profits generated in other countries.
- The G7 had previously announced global tax reform of a minimum 15 per cent tax on global tech companies such as Apple, Google and others in June.
The UK secured a global tax exemption deal with the Organisation for Economic Co-operation and Development (OECD), on its major financial services firms on Wednesday, 30 June 2021.
The deal would thus allow British multinational banking firms to not pay tax on profits made in other countries, according to the Financial Times. Furthermore, according to the OECD deal, the UK will also remove its digital services tax.
The Group of Seven (G7) had announced in June a global tax reform, aimed at global technology companies such as Apple, Google and others to pay at least 15 per cent of tax worldwide.
According to the new G7 tax plans, major companies will also have to pay taxes in the countries where they make revenues in addition to the 15 per cent minimum corporation tax.
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In this article, we take a look at how 3 FTSE 100 listed banking stocks reacted to the news:
- HSBC Holdings PLC (LON: HSBA)
FTSE 100 constituent and banking giant HSBC Holdings announced on Wednesday that it became the fourth founding member of a blockchain technology based KYC initiative in the United Arab Emirates. The move is aimed at supporting businesses that open digital bank accounts in the region.
HSBC’s shares closed at GBX 417.30, down by 0.95 per cent on 30 June, while the FTSE 100 index closed at 7,037.47, down by 0.71 per cent.
HSBC shares were trading at GBX 423.55 on 1 July 2021 at 8:36 AM GMT+1, its market cap stood at £85.237 billion, and its annual return stood at 12.00 per cent.
Also Read: What led HSBC to feature at eighth position in global top 10 banks?
- Lloyds Banking Group PLC (LON: LLOY)
Another FTSE 100 listed company, Lloyds Banking Group, announced recently its plans to shut 44 of its branches. A total of 29 Lloyds and 15 Halifax branded branches are expected to be closed by November due to a drop in the transaction at these branches as customers increasingly shift to digital banking amid the pandemic.
This brings the total number of closures made by the banking group to 100 in 2021.
Lloyd’s shares closed at GBX 46.69, down by 0.21 per cent. Lloyds shares were trading at GBX 47.34 on 1 July 2021 at 8:39 AM GMT+1. Its market cap stood at £33.132 billion, and its annual return stood at 51.88 per cent.
- Barclays PLC (LON: BARC)
Another FTSE 100 listed banking major, Barclays announced on Wednesday that it would globally increase its salary for analysts, associates and vice presidents by 17 per cent. The pay hike comes after several other investment banking firms offered a pay rise to their junior bankers.
Thus, analysts will receive a base pay of up to US $100 thousand after an increase of US $15,000 hike. Meanwhile, associates and vice presidents will both get a hike of about US $25,000 each.
BARC’s shares closed at GBX 171.12, down by 1.20 per cent on Wednesday. Barclays shares were trading at GBX 147.52 on 1 July 2021 at 8:41 AM GMT+1. Its market cap stood at £29.082 billion, and its annual return stood at 52.58 per cent.
Also Read: Spotlight On 2 Banking Stocks: Virgin Money and Barclay Plc
