JPMorgan Chase puts Carnary Wharf plans in doubt over bonus tax
JPMorgan Chase is said to be threatening to axe plans to build a new headquarters for its European operations in London following the introduction of the hax on bankers' bonuses in the UK.
A JPMorgan Chase executive was quoted in the Financial Times as claiming that the introduction of the levy "will be a factor in the decision" of where the new building is to be located. The New York based firm planned to build a £1.5 billion headquarters in Canary Wharf. JPMorgan paid £237 million in November 2008 to acquire land to build a 1.9 million square foot tower, but the terms of the agreement allow for the plans to be scaled back if necessary.
Jamie Dimon, the bank's chief executive, is said to have called UK chancellor Alistair Darling earlier this month to protest about the introduction of the tax and warn that the bank would move investment elsewhere if it deemed that the UK was becoming too hostile to the banking sector.
Darling imposed a 50% tax on discretionary bonuses greater than £25,000 at all banks operating in the UK, a levy which the Treasury says will raise more than £550 million from around 20,000 people.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more