Bonus tax may lead JP Morgan to scrap London HQ
JP Morgan may scrap plans to build a £1.5 billion headquarters in London because of concerns about the 50 per cent tax on bonuses and Britain’s regulatory crackdown.
Jamie Dimon, JP Morgan’s chief executive, expressed anger at the tax and other issues in a telephone call with Alistair Darling this month.
Mr Dimon is understood to have made clear his frustration that the bank, which emerged as one of the strongest banks from the financial crisis, would be caught by the tax, which was announced by the Treasury along with the Pre-Budget Report.
JP Morgan is among several large banks that are worried that Britain is becoming an increasingly unfriendly place to operate. As well as the bonuses tax, senior financiers are concerned that new rules emerging from the Financial Services Authority will impose far greater scrutiny and restrictions on institutions than previously.
A JP Morgan executive said of the call between Mr Dimon and Mr Darling: “There were no threats made on the call and we have made no decisions on people or buildings based on the super-tax announcement.”
JP Morgan is one of several banks that are beginning to consider whether they should continue to have significant operations in London. It employs thousands of staff in the UK, which is the headquarters for its European operation.
The bank must decide whether to go ahead with its planned new headquarters in Canary Wharf soon, as it has an option with Songbird Estates, the developer, to pull out of the deal by the end of next year. That decision is hanging in the balance and many in the City believe that the bank will not go ahead with the building.
Analysts believe it probable that HSBC will move away from Britain. The bank revealed in the autumn that it was reorganising its senior management structure. Michael Geoghegan, its chief executive, will move to Hong Kong in the new year.
Barclays may also consider its options. The bank signalled its willingness to move its head office when it pledged to relocate to Amsterdam as part of its offer for ABN Amro in 2006. Some think that the bank could be tempted by a move to New York, after its acquisition of Lehman Brothers last year. John Varley, the chief executive, has publicly criticised the Treasury’s 50 per cent tax, which will be levied on all UK and foreign banks operating in London on bonuses that exceed £25,000. Mr Varley said: “I think that London could well be damaged by this.”
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