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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Barclays PLC    BARC   GB0031348658

BARCLAYS PLC

(BARC)
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Banks to pay extra $6.3 billion UK tax over next five years

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12/03/2014 | 01:23pm EST

LONDON (Reuters) - Banks will pay an extra 4 billion pounds ($6.3 billion) in taxes over the next five years due to changes announced in the autumn statement, Finance Minister George Osborne said on Wednesday.

Osborne said he would change rules which enable banks to offset losses from the financial crisis of 2007 to 2009 against tax on profits for years to come, which had meant some banks wouldn't be paying tax for 15 or 20 years.

"The banks got public support in the crisis and they should now support the public in the recovery. I am limiting the amount of profit in established banks that can be offset by losses carried forward to 50 percent and delaying relief on bad debts," Osborne said.

The move, which will also impact international banks with operations in Britain, was described as "unexpected and significant" by Jonathan Richards, a director at EY.

"It is likely to represent a significant additional cash tax cost for the banking sector over the next few years," he said.

Britain's biggest five banks: Lloyds Banking Group (>> Lloyds Banking Group PLC), HSBC (>> HSBC Holdings plc), Barclays (>> Barclays PLC), Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) and Standard Chartered (>> Standard Chartered PLC), have more than 17 billion pounds of loans on their books on which tax is deferred, though some of that includes overseas assets subject to local tax rules.

In Britain, RBS had 2.4 billion pounds of deferred tax assets at the end of 2013, Barclays had 499 million, HSBC had 255 million and Standard Chartered 110 million. Lloyds did not give a separate UK figure but has 5 billion pounds of deferred tax assets in total, the majority of which are in Britain.

"Lloyds appears to be the most affected," said Investec analyst Ian Gordon.

The government also said it has asked Britain's financial regulator to consider asking banks to guarantee customers can switch lenders in five working days, quicker than the current seven day deadline. The move is part of measures to increase competition within the industry.

Shares in Lloyds were down 1.2 percent, Barclays were 0.6 percent lower, HSBC were down 0.4 percent and RBS were 0.1 percent lower at 1555 GMT. Standard Chartered were up 1.5 percent.

(Editing by David Holmes and Elaine Hardcastle)

By Matt Scuffham and Steve Slater

Stocks mentioned in the article
ChangeLast1st jan.
BANCO SANTANDER, S.A. -0.95% 3.54 End-of-day quote.-10.04%
BARCLAYS PLC -0.25% 170.7 Delayed Quote.13.43%
HSBC HOLDINGS PLC 0.23% 575 Delayed Quote.-11.32%
LLOYDS BANKING GROUP 0.96% 59.74 Delayed Quote.14.12%
STANDARD CHARTERED -0.80% 697.6 Delayed Quote.15.41%
THE ROYAL BANK OF SCOTLAND GROUP PLC 0.09% 224.9 Delayed Quote.3.69%
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Financials (GBP)
Sales 2019 21 526 M
EBIT 2019 6 993 M
Net income 2019 2 498 M
Debt 2019 -
Yield 2019 5,17%
P/E ratio 2019 12,2x
P/E ratio 2020 7,36x
Capi. / Sales2019 1,37x
Capi. / Sales2020 1,34x
Capitalization 29 481 M
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 193,44  GBp
Last Close Price 170,74  GBp
Spread / Highest target 46,4%
Spread / Average Target 13,3%
Spread / Lowest Target -35,2%
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Managers
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James Edward Staley Group Chief Executive Officer & Director
Taylor Wright Co-Head-US Equity & Managing Director
Nigel Paul Higgins Group Chairman
Paul Herbert Compton Group Chief Operating Officer
Tushar Morzaria Group Finance Director & Executive Director
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