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Wed, Dec 30, 2009 - Page 10 News List

JPMorgan official pans new UK tax on banker bonuses


JPMorgan Chase & Co CEO Jamie Dimon told British Chancellor of the Exchequer Alistair Darling that his 50 percent tax on banker bonuses would unfairly penalize the US bank, a person close to the firm said.

Dimon, 53, mentioned plans to build European headquarters in London’s Canary Wharf for £1.5 billion (US$2.4 billion) as an example of the New York-based company’s commitment to the city, the person said. Dimon reiterated that the bank, the second-biggest US lender by assets and deposits, paid British taxes and didn’t take a British taxpayer bailout, the person said, declining to be identified because the conversation was private.

The telephone call was made after Darling on Dec. 9 imposed a 50 percent tax on discretionary bonuses greater than £25,000 at all banks operating in the UK. The tax, which the Treasury says will raise more than £550 million, covers about 20,000 people in the UK.

JPMorgan is considering dropping plans to build its European headquarters at Canary Wharf because of the UK bonus tax, the Financial Times newspaper reported yesterday, citing an unidentified bank executive. The bonus tax will be a factor in the decision, the executive told the newspaper.

The Dimon phone conversation with Darling was reported on Monday by the London Telegraph. JPMorgan spokesman David Wells declined to comment. A UK Treasury spokesman defended the tax as fair because it would apply to all banks and said he couldn’t confirm whether the conversation took place.

The UK Treasury is working with banks to identify employees who are excluded from the tax, and Darling said on Dec. 16 he will resist calls to change the policy. He suggested banks’ complex operations won’t allow them to escape the levy by arguing that some activities aren’t defined as banking.

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