"Reeves spared the banks from a windfall tax in her 26 November budget, and the UK's regulators have just loosened capital rules, for the first time since the financial crisis. Back in the summer, bank share prices ticked down after the Labour-leaning Institute for Public Policy Research (IPPR) recommended an 8bn levy on the windfall profits made as a result of quantitative easing (QE)."
"JP Morgan responded with the announcement of a new 3bn HQ in Canary Wharf, east London, with chief executive Jamie Dimon saying the UK government's priority of economic growth has been a critical factor in helping us make this decision. His praise came as little surprise, as the FT had already reported that Reeves's team, lobbied heavily by the banks against a windfall tax, had been urging financial executives to show their gratitude for the chancellor's forbearance."
"Little more than a week later, the Bank of England announced it would reduce banks' capital requirements the reserves they must hold against their assets to absorb potential losses. The logic for both decisions was clear: the financial sector is, as Reeves told City bigwigs in her first Mansion House speech, the crown jewel of the economy, and with growth puttering along just above zero, now is not the time to plunder the banks for tax revenue."
The government left banks untouched in the 26 November budget and UK regulators loosened capital requirements for the first time since the financial crisis. An earlier IPPR recommendation for an 8bn levy on QE-related windfall profits caused bank shares to dip and drew pushback from the Treasury. JP Morgan announced a new 3bn Canary Wharf HQ, attributing the decision to the government's growth priority, while Reeves's team encouraged bankers to acknowledge forbearance. The Bank of England cut capital buffers to free up lending, with policymakers framing banks as the economy's crown jewel amid sluggish growth.
Read at www.theguardian.com
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