British bank tax could be a buy signal
XLF•The FTSE 350 banking index is nearly 14% below its August peak as investors worry about a possible tax rise in Britain’s budget next week. UBS says doubling the 3% banking surcharge could cut UK banks’ profits by about 2% on average, and by 3% to 4% for domestically focused banks.
1. Tax concerns weigh on banks
The FTSE 350 banking index is nearly 14% below its August peak, with concerns about higher taxes in Britain’s budget next week contributing to its underperformance. UBS says the market is primed for a tax rise and has heard some investors may buy bank stocks if an announcement triggers a dip. The bank estimates that doubling the current 3% surcharge would reduce UK banks’ profits by about 2% on average, with a 3% to 4% impact for domestically focused banks.
