Nationwide warning over €422m bank tax

Britain’s biggest building society lender Nationwide says a new banking tax will cost it £300m (€422.7m) over the next five years and potentially hurt lending.

Nationwide, Britain’s second biggest provider of house loans, said the tax cost was the equivalent of the capital required to fund £10bn worth of lending.

Chief executive Graham Beale warned that the introduction of a new surcharge on profits from next year, announced by Finance Minister George Osborne last month, would have a disproportionate impact on building societies, which are smaller than major banks and focus on domestic lending.

“This represents a missed opportunity to support diversity by acknowledging that building societies are different to banks and to recognise the contribution Nationwide and other mutuals make by lending to the UK economy, and the housing market in particular,” Mr Beale said.

Nationwide paid £28m in tax under Britain’s existing bank levy in the 2014/15 tax year.

In an interview with Reuters, Beale said the new surcharge would see its net tax cost rise to between £90m and £100m in the 2016/17 financial year, the first in which the new rules will have a full impact.

Mr Beale said customer-owned lenders such as Nationwide should be treated differently to banks because they are less of a risk to the British economy.

“Instead of having a surcharge of 8% for the large mutuals, to acknowledge that we’re different with a different risk profile, it could have been 4%,” he said.