NatWest CEO Paul Thwaite has voiced strong opposition to proposals for a new windfall tax on banks, warning the UK government against such a move. He argued that "strong economies need strong banks" and stressed the importance of consistent, stable, and predictable policy signals to attract investors and support the wider UK growth agenda. Thwaite's comments come as NatWest reported a better-than-expected 18% rise in first-half profit to £3.6 billion and a 30% jump in profits to £2.18 billion in the three months to the end of September. The bank also upgraded its full-year profit guidance and announced a £750 million share buyback.
Thwaite highlighted NatWest's significant contribution to the UK economy, noting its role in one in eight UK mortgages and lending to one in four UK businesses. He stated that the bank would prefer to use its capital to make loans and support customers, which ultimately benefits the country's growth. He also acknowledged the "difficult choices" facing Chancellor Rachel Reeves regarding a potential £30 billion to £50 billion shortfall in public finances but emphasized the need to balance fiscal discipline with policies that foster stability and growth.
Analysts, such as Matt Britzman of Hargreaves Lansdown, noted NatWest's strong performance, comfortably beating expectations, suggesting that UK-focused banks are performing better than often acknowledged. Thwaite's concerns are echoed by other major UK bank CEOs, including Barclays' C. S. Venkatakrishnan and Lloyds' Charlie Nunn, who previously stated that a rise in bank taxation would be inconsistent with government efforts to boost growth. The banking sector's total tax rate in London for 2024 is already 45.8%, higher than European rivals like Amsterdam (42%) and Frankfurt (38.6%).
There has been speculation that the Chancellor might consider various tax increases, including on banks, property, and landlords' rental income, to address public finance challenges. Deputy Prime Minister Angela Rayner had previously proposed raising the bank surcharge to 5%, which, along with corporation tax, contributes to the overall tax burden on banks. UK Finance estimates the sector's total tax contribution to be £44.8 billion in the 2023/24 financial year.
