Europe responds to new U.K. bank tax
City workers walk through London's Canary Wharf
TEXT OF INTERVIEW
Bill Radke: President Obama's plan to tax big financial firms is rippling across the pond. Three of Britain's biggest banks are facing billions in fees. Marketplace's Stephen Beard joins us live from London. Stephen, why are British banks getting hit?
Stephen Beard: Because they've got a big presence on Wall Street. We're talking here about Barclays, HSBC and the Royal Bank of Scotland. They're expected to pay between them more than a billion dollars a year in tax. That's around $11 billion for the 10-year period of this new tax in the U.S.
Radke: And is this proposed tax having any other ripples in Europe?
Beard: It's making European investment banks generally very nervous, because it does strengthen the hand of European governments that would like to do the same, or who have already started taxing bankers more heavily. Britain has just introduced a one-off, 50 percent tax on bank bonuses, and there was a lot of squealing from the bankers that they might pull out of London as a result. Well professor Stefano Harney of Queen Mary University business school says that threat by the bankers now looks less credible.
Stefano Harney: Obviously they can't go to the United States, they probably can't go to most of Europe with the possible exception of Switzerland. So I think the question now is: You want to leave? Well, where is it you're planning to go?
He doesn't believe the big banks would relocate their headquarters to Dubai, Mumbai or Shanghai, because come the next crisis, they probably wouldn't get bailed out by taxpayers there.
Radke: Marketplace's Stephen Beard in London. Thank you.
Beard: OK, Bill.