Andrew Tyrie asks regulator to review effect of new bank tax
By Matt Scuffham
LONDON (Reuters) - The chairman of an influential committee of British lawmakers has asked the country's financial regulator for assurance that a new banking tax will not damage competition within the industry.
Chancellor of the Exchequer George Osborne announced plans to introduce an 8 percent surcharge on banks' profits above 25 million pounds from next year in his annual budget in July, but the move has been criticised by so-called challenger banks which say it will hit them disproportionately.
Andrew Tyrie, chairman of parliament's Treasury Committee, has written to the chief executive of the Prudential Regulation Authority (PRA), Andrew Bailey, saying the committee wanted an assurance from the regulator that it has assessed the effect of the new tax on competition in the retail banking sector.
"It is essential that the surcharge does not obstruct parliament's efforts over the last four years to increase competition in the banking sector," Tyrie said.
The move took the industry by surprise because lawmakers and regulators have been keen for new banks to emerge and challenge the dominance of Britain's biggest four lenders -- Lloyds Banking Group , Royal Bank of Scotland , Barclays and HSBC -- which provide more than three-quarters of personal current accounts and make nine out of every ten business loans.
"Millions of consumers and small businesses have been getting a poor deal for decades because of inadequate competition and choice in banking. It is crucial that competition from new and smaller banks is not unnecessarily impeded by prudential regulation," said Tyrie.
The regulator has already eased capital requirements for new banks and streamlined the process for obtaining a banking licence but smaller banks say they still operate at a disadvantage to larger rivals.
A group of new and smaller British banks have set out proposals aimed at offsetting the new tax, including an arrangement that would mean small banks would not have to set aside more capital against loans than larger rivals.
The group includes TSB, Secure Trust , Aldermore , Shawbrook , Tesco Bank , Sainsbury Bank , Close Brothers , Paragon and Metro Bank.
Britain's competition watchdog is due to publish the provisional findings of an investigation into the market for personal current accounts and small business banking services later this month.
(Editing by Adrian Croft)
