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UK banks to be hit by US banking levy

It has been revealed that UK banks are expected to foot a tax bill of around $10 billion after the introduction of a banking tax on all US banking operations. While some of the largest UK banks will have significant penalties to pay under the new system these have been shrugged off as "manageable" and unlikely to impact upon the short to medium term performance of UK banking operations.

While it is interesting to see that UK banks are confident that their financial position will not be impacted by the US government's move, there is a feeling that US banks may well be benefiting from the UK government's reluctance to go down a similar path. While you could argue the 50% tax on banking bonuses will impact on the industry, this is an individual tax and not one which companies are expected to cover.

If the US authorities continue to attack the US banking sector, bringing in UK operations with US exposure, the pressure on the UK government to react likewise will grow. However, there is concern this would be a step too far when you consider the increasing regulatory costs in the UK financial sector and the pressure being felt at the moment due to a lacklustre economy.

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