Banks threaten to look beyond London as windfall tax talk grows

International lenders say they’ll put their money elsewhere if the UK raises taxes on the banking sector, according to a UK Finance survey picked up by the Financial Times. Fourteen foreign banks with big UK footprints and a combined 35k staff in the country said London is no longer their automatic pick for a European base, as it was before Brexit, adding that heavier tax and tighter visa rules would make them rethink their UK presence.

Why now? Lenders are worried next month’s budget will include a windfall levy, with Chancellor John Healey hunting for cashflows to cover the rising cost of government debt since the Iran war began. Bank earnings make the sector an obvious candidate. Britain’s four largest high-street lenders (NatWest, Lloyds, and the domestic units of Barclays and HSBC) booked GBP 13 bn in combined pre-tax income in 1H 2026, up 16% y-o-y. Union leaders cite last year’s GBP 25 bn in bonuses as proof banks can shoulder more. But UK Finance chief David Postings warned that additional tax could push the industry past a “tipping point.”

The banks’ side: PwC analysis commissioned by UK Finance puts the total tax take on London’s corporate and investment banks at 46.5% of income. No other major US or European hub is higher: Amsterdam sits at 42%, Dublin at 29% and New York at 28%, while Germany’s reforms will bring Frankfurt down to 34% from 39% by 2032.

The wealthy are heading out too: Macro hedge fund founder Chris Rokos, among the UK’s three largest individual taxpayers, is relocating to Athens and setting up an office there. Greece caps annual tax on foreign income at EUR 100k for as long as 15 years, in exchange for at least EUR 500k invested locally, making it a more tax-friendly option for high-net-worth individuals. Millennium Management is also said to be considering a Greek office. The departures come after the UK scrapped the non-dom regime and raised taxes on inheritance, capital gains and private equity.

Where the Gulf fits in: The UAE is still drawing wealth. The likes of Millennium Management and Rokos Capital have set up shop in the UAE, alongside their other hubs. But the field of rivals is widening. Turkey rolled out tax breaks for wealthy expats and investors in August; Hong Kong is moving to widen its tax exemption on carried interest beyond private equity to other fund strategies, with the bill expected to go to a final vote later this year; and Greece’s flat-tax regime has now landed one of London’s biggest names.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with Japan’s Nikkei gaining 0.3% and Hong Kong’s Hang Seng down 1.5%. Mainland China’s CSI 300 and South Korea’s Kospi are closed for holiday. Meanwhile, Wall Street futures point to a weaker open after the S&P 500 and Nasdaq finished the day flat yesterday.

THE CLOSING BELL-

The ADX fell 0.6% yesterday on turnover of AED 1.2 bn. The index is down up 2.1% YTD.

In the green: Hayah Ins. (+7.5%), Mair (+2.5%), and Pure Health Holding (+2.2%).

In the red: National Bank of Fujairah (-5%), Americana Restaurants (-4.1%), and Invest Bank (-3.1%).

Over on the DFM, the index fell 0.4% on turnover of AED 583 mn. Meanwhile, Nasdaq Dubai fell 0.7%.