Goldman Sachs, U.S. Investment Banks Face `Minimal' Impact From U.K. Levy

Britain’s new bank levy will have a “minimal” impact on U.S. investment banks with operations in London, with Goldman Sachs Group Inc. likely to pay only a sixth of the bill it faces for the bonus tax.

International banks such as Goldman Sachs and JPMorgan Chase & Co. may pay about a quarter of the 2 billion-pound ($3 billion) total levy a year, according to analysts at Seymour Pierce Ltd. and Bank of America Corp.’s Merrill Lynch unit today. The U.K.’s five biggest banks will pay about 76 percent of the Treasury forecast for the bank tax, according to Mark Phin, an analyst at Keefe, Bruyette & Woods Ltd.

“The impact will be minimal for U.S. investment banks,” said Richard Staite, an analyst at Atlantic Equities in London with an “overweight” recommendation on New York-based Goldman Sachs. “It could impact Goldman by about $100 million per year, or about 1 percent of earnings. That assumes the industry in general doesn’t pass on the cost to customers.”

Goldman Sachs, the most profitable Wall Street firm in U.S. history, has said the U.K.’s one-time bonus tax will leave it with a $600 million bill. In December, the U.K. put a one-time 50 percent levy on bankers’ discretionary bonuses.

Spokeswomen for JPMorgan and Goldman Sachs in London declined to comment on the bank levy today.

Chancellor of the Exchequer George Osborne told lawmakers yesterday the tax will raise about 2 billion pounds annually as other European governments consider similar taxes to tackle budget deficits inflated by bank bailouts. The 0.07 percent levy on wholesale liabilities is less than half the 0.15 percent rate being considered by the U.S. government.

The six biggest U.K. banks will pay about 1.5 billion pounds of the 2 billion pounds forecast, with the remaining 500 million pounds coming from building societies and foreign banks, Bank of America said today in a note to clients.

To contact the reporters on this story: Ambereen Choudhury in London achoudhury@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net