If you were designing a new national sport that every Briton could enjoy, you do worse than call it Bash the Banker.
Everybody hates the banks, and understandably so, given their culpability for the financial crisis and lack of repentance thereafter.
It might been better for the banks themselves if they had suffered tougher punishment at the time, clapped in irons rather than given golden handshakes (and pensions).
If they had been properly punished in the heat of the crisis they might have been forgiven today. Instead, revenge has been served up cold and late, and is proving increasingly unpalatable for investors.
Bash!
It is also increasingly discriminate, hitting banks that required a bailout, such as Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US), alongside those that didn’t, Barclays (LSE: BARC) (NYSE: BCS.US) and HSBC Holdings (LSE: HSBA).
Chancellor George Osborne had another go last week, raising the banking levy to 0.21% in the Budget. That is the eighth hike in the last four years
This was designed to steal Labour’s thunder had the election, because Ed Balls wanted to do something similar.
Given the insatiable appetite for revenge, I’m sure that won’t stop him. The Lib Dems already want to raise corporation tax on the banks to 28%, against 20% for everybody else.
They don’t have many populist policies but that would certainly be one of them. This is a game anyone can play.
Thump!
Mr Osborne didn’t stop there. He also cut corporation tax relief for bank fines, and that is on top of measures announced in December to cut tax relief for losses from previous years.
The three measures are anticipated to cost the sector a thumping £9bn in total across the next Parliament.
The financial regulators are dab hands at Bash the Banker, regularly upping capital ratios, and inflating fines to mind-boggling sums.Â
This is an international sport, with US regulators joining in at every opportunity.
Thud!
Bashing the UK’s biggest industry could ultimately prove an economic disaster, if it forces foreign banks such as HSBC and Standard Chartered out of the UK.
It is certainly a disaster for investors today. We want banks to play by the rules, but we also want them to be competitive and profitable, rather than milked for cheap political gain at every opportunity.
Kapow!
The banks are at bay, and it will only get worse when as the election campaign intensifies, or if Labour wins.
Banker bashing is fun, but investors shouldn’t let themselves be whipping boys as well.