JPMorgan’s Dimon Called Darling to Reject Bonus Tax
Dec. 29 (Bloomberg) -- JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told U.K. Chancellor of the Exchequer Alistair Darling that his 50 percent tax on banker bonuses would unfairly penalize the U.S. 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 pounds ($2.4 billion) as an example of the New York-based company’s commitment to the city, the person said. JPMorgan is considering dropping the Canary Wharf plans because of the bonus tax, the Financial Times reported today, citing an unidentified bank executive.
In the call to Darling, Dimon reiterated that the bank, the second-biggest U.S. lender by assets and deposits, paid British taxes and didn’t take a U.K. 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 pounds at all banks operating in the U.K. The tax, which the Treasury says will raise more than 550 million pounds, covers about 20,000 people in the U.K.
The Dimon phone conversation with Darling was reported yesterday by the London Telegraph. JPMorgan spokesman David Wells declined to comment. A U.K. Treasury spokesman yesterday defended the tax as fair because it would apply to all banks and said he couldn’t confirm the telephone conversation.
Tullett Prebon
Financial firms are threatening to leave the U.K. as increased taxes and regulation make London a less attractive location. Tullett Prebon Plc, the inter-dealer broker, said it will help employees depart following the government’s decision to put a 50 percent tax on bankers’ bonuses.
BlueCrest Capital Management Ltd., a London-based hedge fund firm that oversees about $15.4 billion, plans to open a Geneva office, a person familiar with the situation said last month. As many as 50 of BlueCrest’s 300 employees in London may move, the person said.
Deutsche Bank AG Chief Executive Officer Josef Ackermann said on Dec. 12 that Germany has a “comparative advantage” over other financial hubs because it doesn’t plan to tax bonuses. The bank said it plans to spread the costs of the U.K. bonus tax to all employees worldwide.
Canary Wharf
The U.K. Treasury is working with banks to identify employees who are excluded from the tax, and Darling said 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.
JPMorgan paid 237 million pounds in November 2008 to acquire land in London’s Canary Wharf financial district to build a 1.9 million square foot (176,500 square meter) tower.
Under the agreement with Canary Wharf’s owners, who will build the offices, JPMorgan can scale back the size of the project. The planned headquarters will house JPMorgan employees from seven other buildings after the bank scrapped plans to build a new office in London’s main financial district.
bloomberg
